Advanced Micro Devices Inc. was forced to give its stockholders another week to weigh the chip maker's plan to spin off its manufacturing operations, after too few shares were voted at a meeting held this morning.
AMD announced that 97% of the shares voted at the meeting, which was held in Austin, were cast in favor of the spin-off plan. But votes were cast for only 42% of the company's shares. To reach a quorum, a majority of the shares needed to be voted.
As a result, the company decided to adjourn the meeting until Feb. 18 to give stockholders more time to vote on the plan, under which AMD's chip plants would be taken over by a new entity that will temporarily be called The Foundry Co.
The spin-off would be majority-owned by an investment firm controlled by the government of Abu Dhabi in the United Arab Emirates. AMD would hold a 34.2% ownership stake, down from the 44.4% that it was originally due to own — a decrease that the parties agreed to in December after a drop-off in the value of AMD's stock.
Asked about the low number of votes that were cast at today's meeting, AMD said that it moved too quickly to close the deal and didn't give stockholders enough time to vote.
"In essence, we pursued too aggressive a timeline for the vote," AMD spokesman Michael Silverman said via e-mail. "All parties remain fully committed to closing the transaction and, pending the stockholder vote, expect to close the transaction in the next few weeks."
Doug Freedman, a financial analyst at Greenwich, Conn.-based Broadpoint AmTech, accepted the company's explanation. "I just think the timetable on the proxy to vote was too tight," Freedman said.
However, Wall Street punished AMD for the delay. The company's share price was down nearly 12% this afternoon, to less than $2.10 per share.
AMD has been struggling financially for several quarters, and the spin-off deal is intended to help turn around its fortunes by offloading the company's costly manufacturing operations and the substantial debt it has accumulated there.
If the deal is eventually approved by stockholders, AMD would essentially be broken into two separate parts. AMD itself would continue to design and market its chips, while the spin-off would own and operate the company's manufacturing plants in the U.S. and Germany.
AMD has cleared the major regulatory hurdles to the deal, making the stockholder vote its last big obstacle. The company expects to complete the spin-off within a few days of getting stockholder approval, according to company executives.
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