AMD and Xilinx Merger Hinges

Based in New York, Jahanara Nissar serves as managing partner at Lynx Equity Strategies and delivers research focused on technology stocks spanning hardware, semiconductors, and the Internet. Drawing on leadership experience with Alliance Bernstein, Jahanara Nissar regularly provides opinions on financial sites such as Bloomberg and Street Insider.

In early August 2021, she described a widening spread related to the proposed merger between Advanced Micro Devices, Inc. (AMD) and Xilinx, as having reached "extreme irrationality.” The discount market close of 40 percent seemed to reflect an investor's belief that the deal closure probability was nearly zero. With Chinese antitrust approval the major obstacle, AMD stock rose nearly six percent, while Xilinx fell 3.7 percent.

The AMD stock price surge, 24 percent total from late July to early August, reflected strong reported corporate results. Regulatory approvals for the Xilinx acquisition were attained in markets such as the UK and EU. From AMD’s perspective, the firm was still on track to achieve approval from Chinese authorities, with a 50 percent chance of ultimate success forecast.

According to Ms. Nissar, despite China’s increasingly harsh stance on technology mergers, this moderately positive potential for the merger is closer to reality than the “near-zero probability scenario” envisioned by some investors.