November 16, 2007 / 6:13 AM / 12 years ago

UPDATE 3-Abu Dhabi invests $622 mln in Advanced Micro Devices

(Adds details from statement, share price)

By Dayan Candappa

DUBAI, Nov 16 (Reuters) - Abu Dhabi’s Mubadala Development Co said on Friday it had bought 8.1 percent of U.S.-based Advanced Micro Devices Inc AMD.N, the second-largest maker of computer processors, for $622 million.

Mubadala, owned by the government of the world’s sixth-largest oil exporter, will not get a seat on the board of the California chip-maker, which will spend some of the cash on research and development, the two companies said in a statement.

Advanced Micro Devices controls about a fifth of the market for the central processing units at the heart of the world’s one billion personal computers and servers, and Intel Corp (INTC.O) the rest.

The two companies have been locked in a price war and Advanced Micro Devices has reported four straight quarters of net losses.

The company’s shares gained 3.5 percent to $13.15 before the bell in New York. The shares were down 0.9 percent at 12.59 at 1626 GMT.

Mubadala bought 49 million new shares at Thursday’s closing price of $12.70 each, according to the statement. The U.S. company reimbursed Mubadala for $14.6 million in expenses and kept the rest.

Mubadala is one of the state-agencies Abu Dhabi and other members of the United Arab Emirates are using to invest their windfall from a five-fold increase in oil prices in the past five years.

Mubadala’s investments include the 1.3 billion Swiss franc ($1.16 billion) takeover of Swiss aircraft maintenance firm SR Technics last year with other UAE agencies, and a 5 percent stake in Ferrari, the Italian sports car maker.

Advanced Micro Devices said in a registration statement with the U.S. Securities and Exchange Commission on Thursday it would sell up to $700 million in common stock periodically and use the proceeds for general corporate purposes.

The deal with Mubadala could attract the attention of the U.S. Committee on Foreign Investment, which vets acquisitions by overseas investors, particularly in technology and defence companies, on national security grounds, the Financial Times said on Friday.

A spokesman for Advanced Micro Devices said that, contrary to the Financial Times report, the company’s work did not include government contracts. (Additional reporting by Valerie Lee in Singapore and Justin Grant in New York; Editing by Quentin Bryar/Sue Thomas)

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