Two months after announcing its foundry spinoff, AMD says it will get significantly less than expected out of the deal. The chipmaker has ended up renegotiating the spin-off transaction agreements, sweetening the pot for Middle Eastern investment firms ATIC and the Mubadala Development Company.
As part of the revised agreements, AMD's stake in the future spun-off foundry business—temporarily called The Foundry Company—has shrunk from 44.4% to 34.2%, although AMD will still get equal voting rights with ATIC. That change stems from a devaluation of AMD's manufacturing assets, which "will be reduced from a multiplier of 1.13x to 0.85x of the net book value of the assets," according to the official press release.
Mubadala still intends to purchase 58 million AMD shares as part of the deal, but it will do so at a revised stock price: either the average for the 20 days leading up to and including December 12 or the average in the 20 days before the deal closes, depending on which one is lower. For reference, AMD's stock was worth around $4.59 on October 7, the day after the spin-off announcement, but it's sitting at $2.16 right now.
The amended spin-off agreements will also see Mubadala get 35 million warrants to purchase AMD stock (up from 30 million), and the "net asset valuation multiple on future capital calls" for The Foundry Company will drop from 1.1x to 0.9x. AMD, ATIC, and Mubadala still expect the transaction to close early next year.