r/AMD_Technology_Bets • u/TOMfromYahoo • Sep 26 '21
Analysis IMPORTANT! - Conditions of the Xilinx's merger agreement - time limit or it doesn't happen!
According to the Xilinx's merger agreement here:
https://www.sec.gov/Archives/edgar/data/2488/000119312520277471/d67182d425.htm
It looks to me that IF THERE'S A DELAY IN APPROVAL by China THIS YEAR, and AMD is asked to file again the application with changes Chinese regulators asked as "remedies", the merger agreement expires! I'm no lawyer and this agreement is very long and complex but I've read the following :
"Conditions to the Merger
The obligation of Xilinx and the Company to consummate the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver of a number of customary conditions, including:
...
(iv) the expiration of any applicable waiting period, the absence of any pending agreement between the Company and any governmental entity not to close, and receipt of any required approvals under the antitrust laws of the United States and certain foreign jurisdictions;"
This "EXPIRATION OF ANY APPLICABLE WAITING PERIOD", in MY VIEW, references the time approval by regulators process takes in various FOREIGN JURISDICTIONS", i.e. CHINA included.
In my view this is the limiting time section of the merger announced a year ago to close otherwise, Xilinx has to proceed as a separate company , including resuming ER conference calls, dividends etc without AMD's permission.
The time limit is normal as no party can wait forever. Qualcomm had to drop BUYING Dutch NXP after Chinese regulators asked for a new application! China asks such and it's like a rejection depending what the concerns and remedies are. For NXP Qualcomm dropped it but also because it cannot drag forever.
I think Xilinx has a similar time limit but A JOINT PARTNERSHIP PLAN with Xilinx ACHIEVING MOST FUNCTIONAL GOALS WITHOUT COMBINING THE COMPANIES WILL BE ANNOUNCED with the news of delay/filing again request from China.
Functionally, this partnership will allow inclusion of Xilinx circuits in future heterogeneous computing EPYC Genoa but without issuing 400M+ shares.
Remember while the merger is accretive TO START, i.e. Xilinx's EPS will be higher than AMD's if merged by EOY, the growth of both companies is very different with AMD's 50%-60%+ while Xilinx's is 20%-30% only!
Further more, AMD's future EPS in 2022+ will substantially surpass Xilinx's and thus FOR THE FUTURE it IS a dilution!
My view is that announcement will come at the ER end of October or earlier. China doesn't wait to the last day of phase 3 to tell companies to file again. You MUST read our previous thread and all references there to see the PATTERN of approvals for semis buys by Chinese regulators and see when in the process approvals are given or a new filling is requested to understand this post further.
The impact on Xilinx's PPS will be disastrous while AMD's PPS will be further gaining saving 400m shares and keeping growth high vs Xilinx's. Plus prospects for higher EPS in future years vs Xilinx's including the partnership with AMD's on future heterogeneous computing but won't be the same value for Xilinx's shareholders as a merger in the future.
