confirmed: AMD will buy ATI for $5.4 billion

[AirRaid Mach 2.5]

provided ATI shareholders approve


http://www.theinquirer.net/default.aspx?article=33223

http://www.theinquirer.net/images/articles/ortonruiz.jpg


AMD confirms ATI acquistion

Chip maker borrows $2.5 billion to 'transform the industry'

By INQUIRER newsdesk: Monday 24 July 2006, 10:15
AMD CONFIRMED its acquisition of ATI this morning, three days after the
INQUIRER let the cat out of the bag.

While we doubted the chip-maker could afford to buy out the Canadian
graphics chip firm, it turns out CEO Hector Ruiz went cap in hand to
his bankers and borrowed a cool $2.5 billion.

Ruiz crowed the deal would "reinvent our industry," as he appeared in
New york with ATI CEO Dave Orton.

AMD agreed to acquire all of the outstanding common shares of ATI for a
combination of $4.2 billion in cash and 57 million shares of AMD common
stock, based on the number of shares of ATI common stock outstanding on
July 21, 2006.

The total comes to $5.4 billion.

AMD said the deal was 'unanimously approved' by the board of directors
of each company, but it is still subject to ATI shareholder approval.

AMD said it had obtained a $2.5 billion term loan commitment from
Morgan Stanley Senior Funding, Inc. to help it finance the deal which
has captured the imagination of industry-watchers everywhere.

Crowed Hector: "Bringing these two great companies together will allow
us to transcend what we have accomplished as individual businesses and
reinvent our industry as the technology leader and partner of choice.
We believe AMD and ATI will drive growth and innovation for the entire
industry, enabling our partners to create differentiated solutions and
empowering our customers to choose what is best for them."

Dave Orton, President and CEO of ATI claimed all of the companies'
product lines would benefit. "Joining with AMD will enable us to
innovate aggressively on the PC platform, and continue to invest
significantly in our consumer business to stay in front of our
markets," he reckoned

Orton will join AMD to as an executive vice president of the ATI
business division, reporting to the AMD office of the CEO, comprising
Ruiz and president and chief operating officer Dirk Meyer.

But hundreds of other employees will lose their jobs as the new giant
seeks to cut operating expenses by around $75 million by the end of
2007.

The combination of AMD's processor expertise with ATI's 'strengths' in
graphics, chipsets and consumer electronics, would result in a "new and
more formidable company," the pair claim.

The combined company would have achieved approximately $7.3 billion in
total consolidated sales during the last four quarters with a workforce
of approximately 15,000 employees, according to the joint statement
today.

ATI will pay AMD a termination fee of $162 million should the deal yet
founder. The transaction is expected to be completed in the fourth
quarter of 2006.

 

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PR:

_______________________________________________________________

AMD AND ATI TO CREATE PROCESSING POWERHOUSE

- $5.4 Billion Acquisition Will Drive Growth, Innovation and Choice
-
- AMD and ATI to Hold Joint Executive Conference Call

Today at 8:00 a.m. EDT -

NEW YORK-July 24, 2006-AMD (NYSE: AMD) and ATI (TSX: ATY, NASDAQ:
ATYT) today announced plans to join forces in a transaction valued at
approximately $5.4 billion. The combination will create a processing
powerhouse by bringing AMD's technology leadership in microprocessors
together with ATI's strengths in graphics, chipsets and consumer
electronics. The result: A new and more formidable company, determined
to drive growth, innovation and choice for its customers, particularly
in the commercial and mobile computing segments and in the
rapidly-growing consumer electronics market. Combining technologies,
people, and complementary strengths, AMD plans to deliver in 2007
customer-centric platforms for the benefit of customers who want to
collaborate in the development of differentiated solutions.

AMD's acquisition of ATI will position the new company to deliver
innovations that fulfill the increasing demand for more integrated
solutions in key market segments while also continuing to develop
"best-of-breed" discrete products that empower customers to choose
the combination of technologies that best serves their needs. In 2008
and beyond, AMD aims to move beyond current technological
configurations to transform processing technologies, with
silicon-specific platforms that integrate microprocessors and graphics
processors to address the growing need for general-purpose,
media-centric, data-centric and graphic-centric performance. Thus, the
combined company intends to empower its customers to create their own
unique products and solutions within an open-innovation ecosystem free
from artificial barriers to customer success.

"ATI shares our passion and complements our strengths: technology
leadership and customer centric innovation," said AMD Chairman and
CEO Hector Ruiz. "Bringing these two great companies together will
allow us to transcend what we have accomplished as individual
businesses and reinvent our industry as the technology leader and
partner of choice. We believe AMD and ATI will drive growth and
innovation for the entire industry, enabling our partners to create
differentiated solutions and empowering our customers to choose what is
best for them."

"This combination means accelerated growth for ATI, and broader
horizons for our employees," said Dave Orton, President and CEO of
ATI. "All of our product lines will benefit. Joining with AMD will
enable us to innovate aggressively on the PC platform, and continue to
invest significantly in our consumer business to stay in front of our
markets."

"Windows Vista will deliver incredible advances in the user
experience as a result of advancements in graphics integration and
performance," said Jim Allchin, Co-President of Microsoft's
Platforms & Services Division. "We're excited by the potential of
what AMD and ATI can deliver together to enhance the Windows Vista
experience for our customers even further."

Under the terms of the transaction, AMD will acquire all of the
outstanding common shares of ATI for a combination of $4.2 billion in
cash and 57 million shares of AMD common stock, based on the number of
shares of ATI common stock outstanding on July 21, 2006. All
outstanding options and RSUs of ATI will be assumed. Based upon the
closing price of AMD common stock on July 21, 2006 of $18.26 a share,
the consideration for each outstanding share of ATI common stock would
be $20.47, comprised of $16.40 of cash and 0.2229 shares of AMD common
stock.

AMD anticipates it will finance the cash portion of the transaction
with a combination of cash and new debt. AMD has obtained a $2.5
billion term loan commitment from Morgan Stanley Senior Funding, Inc.
which, together with combined existing cash, cash equivalents,

and short term investments balances of approximately $3.0 billion,
provides full funding for the transaction.

ATI has received an opinion from its financial advisors that the
transaction from a financial point of view is fair to its shareholders.
The transaction was unanimously approved by the board of directors of
each company. The transaction is subject to ATI shareholder approval,
Canadian court supervision of a Plan of Arrangement, and other
regulatory approvals including merger notification filings in the
United States, Canada and other jurisdictions, as well as customary
closing conditions. In the event that the transaction does not close,
ATI has agreed to pay AMD a termination fee of $162.0 million under
circumstances specified in the acquisition agreement. The transaction
is expected to be completed in the fourth quarter of 2006.

A Compelling Financial Opportunity

AMD expects that the transaction will be slightly accretive to earnings
in 2007, and meaningfully accretive in 2008, before the inclusion of
ATI acquisition-related charges, based upon AMD's plans to deliver
more integrated and advanced platform solutions and thereby improve its
position in commercial clients, mobile computing, gaming, media and
emerging markets. AMD anticipates that it will reduce operating
expenses by approximately $75 million for the combined company by the
end of 2007.

The combined company would have achieved approximately $7.3 billion in
total consolidated sales during the last four quarters with a workforce
of approximately 15,000 employees. Headquartered in Sunnyvale,
California, the company will maintain sales, design and manufacturing
centers worldwide and major business centers in Silicon Valley, Austin,
Texas and Markham, Ontario - all valued centers of innovation for the
combined company. AMD's current executive team will be complemented
by the addition of ATI President and CEO Dave Orton. Orton will serve
as an executive vice president of the ATI business division, reporting
to the AMD Office of the CEO, comprised of Chairman and CEO Hector Ruiz
and President and Chief Operating Officer Dirk Meyer. In addition,
under the terms of the acquisition agreement, two ATI directors will
join AMD's board of directors upon closing of the transaction.

The collective roster of AMD and ATI's strong customer relationships
represents a "who's who" of the computing and consumer
electronics industries. Drawing upon a shared culture of
customer-centric innovation and engineering excellence, the combined
company

will be well positioned to meet customer demand for more innovative
solutions, system-level engineering and faster time-to-market.

Conference Call

The companies will host a financial analyst and press conference call
today at 8 a.m. EDT (5 a.m. PDT). The call can be accessed at
612-326-1027 (U.S.). Audio of the conference call will be available
live and also http://www.amd.com/announcement.

For those unable to listen to the live call, a telephone replay will be
available beginning July 24, 2006 at approximately 11:00 a.m. EDT
through July 30, 2006. That call can be accessed by dialing
800-475-6701 (U.S.) or 320-365-3844 (international) with conference
call ID 837580.

About AMD

Advanced Micro Devices (NYSE: AMD) is a leading global provider of
innovative microprocessor solutions for computing, communications and
consumer electronics markets. Founded in 1969, AMD is dedicated to
delivering superior computing solutions based on customer needs that
empower users worldwide. For more information visit www.amd.com.

About ATI

ATI Technologies Inc. is a world leader in the design and manufacture
of innovative 3D graphics, PC platform technologies and digital media
silicon solutions. An industry pioneer since 1985, ATI is the world's
foremost graphics processor unit (GPU) provider and is dedicated to
deliver leading-edge performance solutions for the full range of PC and
Mac desktop and notebook platforms, workstation, set-top and digital
television, game console and handheld device markets. With fiscal 2005
revenues of US $2.2 billion, ATI has approximately 4,000 employees in
the Americas, Europe and Asia. ATI common shares trade on NASDAQ (ATYT)
and the Toronto Stock Exchange (ATY).

Additional Information

In connection with the proposed transaction, ATI intends to file a
management proxy circular with the Canadian securities regulatory
authorities. Investors and security holders are urged to read the
management proxy circular when it becomes available because it will
contain important information about AMD, ATI and the transaction.
Investors and security holders may obtain the management proxy circular
free of charge on SEDAR website maintained by the Canadian Securities
Administrators at http://www.sedar.com as well as on the SEC's
website located at http://www.sec.gov. Investors and security holders
may obtain any documents relating to the transaction filed by AMD with
the SEC free of charge at the SEC's website located at
http://www.sec.gov and filed by ATI on SEDAR at www.sedar.com.