Advanced Micro Devices’ (AMD) planned $35 billion all-stock deal for Xilinx (XLNX) has inched closer to completion. Reuters reports that the company has secured conditional approval from China’s State Administration for Market Regulation. AMD shares fell 7.33% to close at $102.60 on January 27.
Advanced Micro Devices is a leading U.S. semiconductor company. Its Computing and Graphics segment produces processors, integrated graphics processing units, and chipsets. Advanced Micro Devices’ upcoming earnings report for Q4 2021 is scheduled for February 01, 2022.
Xilinx Acquisition
The Chinese market regulator says it will approve the deal on the condition that AMD and Xilinx don’t discriminate against customers that buy one set of products. Additionally, the agency is against the sale of any tie-in products.
The regulator has also asked Advanced Micro Devices to ensure the flexibility and programmability of Xilinx FPGAs. Development methods should also be compatible with ARM-based processors while ensuring that any GPUs and FPGA sold in China are compatible with local products.
The conditional approval is a big deal for Advanced Micro Devices as it competes for market share in the data center chip business with Intel (INTC). Regulatory pressure in the recent past has seen some deals fall through. For instance, Applied Materials (AMAT) was forced to halt plans to acquire Japan’s Kokusai Electric Corp for $2.2 billion amid a regulatory stalemate in China.
Stock Rating
Yesterday Cowen & Co analyst Matt Ramsay reiterated a Buy rating on AMD stock and raised the price target to $150 from $145, implying 46.20% upside potential to current levels.
Consensus among analysts is a Moderate Buy based on 12 Buys and 5 Holds. The average Advanced Micro Devices price target of $155.73 implies 51.78% upside potential to current levels.
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