AMD Gets $608 Million From Persian Gulf Country - InformationWeek
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11/16/2007
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AMD Gets $608 Million From Persian Gulf Country

The investment arm of the Abu Dhabi government bought 49 million shares in Advanced Micro Devices, but it won't get board representation.

Advanced Micro Devices on Friday said it has received $608 million from the investment arm of the Abu Dhabi government, making the Persian Gulf emirate one of the chipmaker's biggest shareholders.

The investment, however, doesn't get Mubadala Development board representation or a controlling interest in AMD, the company said. It also isn't subject to review by the U.S. Committee of Foreign Investment.

Under the deal, Mubadala bought 49 million newly issued shares of AMD stock for $12.70 a share, the Nov. 15 closing price of AMD common stock. The investment, which amounts to an 8.1% stake in AMD, is valued at $622 million, but AMD received only $608 million. The remainder went back to Mubadala as reimbursement for expenses.

AMD plans to use the money for research and development, product innovation, and manufacturing improvements. "This investment strengthens AMD's ability to deliver customer-centric innovation and choice to the marketplace, creating greater value for all of our shareholders," Hector Ruiz, AMD chairman and chief executive, said in a statement.

AMD has suffered significant losses in recent quarters in battling stiff competition from Intel. AMD last month reported a third quarter loss of $396 million due to rising costs from a year ago. AMD's third-quarter market share in terms of shipments, however, rose 0.4% over the previous quarter to 23.5%, while Intel's dipped by an equal amount to 76.3%, an indication that the rivals fought to a standstill during the three-month period, according to IDC.

Mubadala has recently made other investments that reflect a growing foothold in the high-tech industry. Those investments include a deal with Northrop Grumman to collaborate on high-tech aerospace and aviation training programs, and a 7.5% stake in the Carlyle Group, a private equity firm that invests in aerospace, defense, and the high-tech industries, The Wall Street Journal reported.

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