AMD Takeover at Three Times Chip Premium Stifles Bids: Real M&A

While Advanced Micro Devices Inc.’s management vacuum is fueling speculation of a takeover, a possible price tag of three times the average premium for semiconductor makers may deter any acquirers.

AMD, whose chief executive officer resigned last month, has gained 15 percent since two more departures announced on Feb. 9 reignited bets the second-largest maker of processors for personal computers is vulnerable to a takeover. Acquirers of chipmakers in the past five years offered a median of 14.5 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg that includes net debt. That would value AMD’s equity at $12.8 billion, 120 percent higher than its price the past 20 days. The average premium for chipmaker deals since 2006 is 35 percent.