Citi Sees 'Good Chance' Of Xilinx Turning Down AMD Buyout Offer

Citi analyst Christopher Danely keeps a Neutral rating on Xilinx (XLNX) with a $107.50 price target following reports that AMD (AMD) is in advanced talks to buy the company for more than $30B.

This would represent a roughly 20% premium to Xilinx's current stock price of $105.99, Danely tells investors in a research note. The stock in premarket trading is up 16.5%, or $17.56, to $123.55. While the deal would be accretive to AMD given its low margins, there is a "good chance" Xilinx management is against being acquired given its dominant and improving position in the high-margin programmable logic device market, says the analyst.

Qualcomm (QCOM) reportedly made an offer to buy Xilinx several years ago, which if true was likely turned down, and Xilinx management is likely to do the same to AMD, contends Danely. He believes Xilinx management is against getting taken out.