Money for AMD Comes from Mubadala and ATIC

The relationships between the UAE’s government, royal family, and their investment properties, like Mubadala and ATIC, have a major impact on how they approach The Foundry Company project. While the stock and credit markets insist on strong performance one quarter after another, people with almost 10% of the world’s oil in their pocket can ride things out through much rougher, longer rides.

Plus, while the royal family in part shares the motivation of any private investor, they also have the outlook of a government. A state can spend a fortune building a bridge that is expected to last a hundred years, while private investors would balk at the time frame. Abu Dhabi can hang on to assets for decades not only because of its wealth, but to hold out for a potential benefit to its citizenry, even several generations down the road.

The Foundry Company is of interest to Abu Dhabi not only as an investment, but a possible source of technological manufacturing infrastructure and employment. A TFC press release clearly states: “After the upgrade and expansion in Dresden and the build-out of the New York facility, The Foundry Company envisions expanding its global manufacturing footprint over time, if commercially justified, to also include new fabrication facilities in Abu Dhabi.”

This huge (exactly how huge isn’t public) company owns all kinds of stuff on behalf of the UAE’s ruling royal family (we talked about them briefly, along with why AMD would want to sell off their fabs, in the previous article). This includes everything from 5% of Ferrari to 7.5% of US investment firm the Carlyle Group, and multi-billion dollar ventures with GE, Rolls Royce, and others.

Mubadala already owned 8.1% of AMD, and with AMD at the end of its ability to pay for new fabrication while competing with Intel, Mubadala is coming back for more. The deal proposed in October saw 314 million USD going to AMD to more than double MDC’s stake to over 19%, along with the right to appoint a representative to AMD’s board.

This was revised in an amendment December 8th: Mubadala will end up with about the same portion of AMD, but they will pay less for it. Specifically, they will pay the average closing price for the 20 trading days leading up to the 12th or the 20 trading days before the deal closes, whichever is lower. For reference, the average of the 20 trading days ending today puts AMD at $2.22 per share, which would get them just under 130 million.

Of course, that it is a very small amount relative to the total value of the deal. Most of the money is still coming from Abu Dhabi, but via a relatively new body, ATIC.