Advanced Micro Devices Inc. closed a deal with two Abu Dhabi investment firms that spins off its manufacturing operations into a separate company.
AMD will receive US$700 million from investment firm Advanced Technology Investment Company (ATIC), which is owned by the Abu Dhabi government. That will provide AMD a 34.2 share of the manufacturing spin-off tentatively called The Foundry Company, wrote Michael Silverman, an AMD spokesman in an e-mail. The rest of the stake is owned by ATIC.
The Foundry Company is expected to formally launch later this week and will receive a new name, AMD said in a press release. Last month, AMD shareholders approved spinning off the manufacturing operations during a vote.
AMD last year said it would spin-off its manufacturing operations to focus on chip design and cut manufacturing costs. AMD has reported consecutive quarterly losses and was looking to spin off its manufacturing arm in an effort to return to profitability.
The spin-off will unload significant debt and chip manufacturing expenses from AMD's books. The new foundry company will assume debt to the tune of US$1.1 billion from AMD's books, in addition to AMD's fabrication plants in Germany.
In another transaction, Mubadala Development Company, another investment firm owned by the Abu Dhabi government, will pay US$125 million to AMD for a larger stake in the chip maker. When the manufacturing spin-off was announced last year the Abu Dhabi government said it would it would invest in AMD and the Foundry Company through the investment firms.
Mubadala now owns a 19.9 percent share of AMD, Silverman said.
AMD on Monday also appointed Bruce Claflin as a chairman of the company's board of directors, replacing former chairman Hector Ruiz, who retired. Claflin has been a member of AMD's board of directors since 2003, AMD said. Ruiz will now be chairman of The Foundry Company's board.
AMD also announced Mubadala CEO Waleed Al Mokarrab to its board of directors.
AMD's shares were trading at US$2.02 in the after-hours of the stock market, down 7.8 percent.
