BUSINESS COMBINATION

12 Months Ended

Sep. 27, 2025

Business Combination [Abstract]

Business Combination

Business Combination

On May 18, 2025, the Company entered into the Equity Purchase Agreement to acquire ZT Systems from AMD Design, LLC, a wholly owned subsidiary of Advanced Micro Devices, Inc., pursuant to which the Company will purchase all of the outstanding equity interests of ZT Systems, a provider of AI and general purpose computer infrastructure for hyperscale computing companies. Under the Equity Purchase Agreement, the Company will acquire ZT Systems’ data center infrastructure manufacturing business, excluding certain research and development functions. The consideration is subject to certain adjustments based on ZT System’s closing cash, closing net working capital relative to a target amount, closing indebtedness and closing expenses.

In connection with the execution of the Equity Purchase Agreement, the Company obtained the Bridge Loan Facility in an aggregate principal amount of up to $2.5 billion to fund a portion of the purchase consideration in the ZT Acquisition and to pay related fees and expenses. The commitment was intended to be drawn only to the extent that permanent financing was not obtained prior to closing the ZT Acquisition. On July 29, 2025, the Company entered into the New Credit Agreement that provides for $3.5 billion in Credit Facilities, consisting of a $1.5 billion revolving credit facility and a $2.0 billion term loan A facility. On July 30, 2025, the Bridge Loan Facility was reduced from $2.5 billion to $800 million, upon the Company entering into the New Credit Agreement. Effective October 20, 2025, the Company executed an amendment to permit and finance the ZT Acquisition, including adding necessary definitions, funding conditions, and providing a delayed draw term loan A of $600 million, which may be drawn by the Company in up to two separate drawings during the period commencing on the closing of the ZT Acquisition and ending on the one year anniversary of such closing. Additionally, effective October 27, 2025, the Company executed an amendment to increase the Credit Facilities to, among other amendments, include a $800 million term loan B facility.

During the year ended September 27, 2025, the Company incurred $34 million of acquisition and integration charges. These costs primarily consisted of advisory, legal, accounting, and other professional and consulting fees, and were expensed as incurred.

On the Closing Date, the Company completed the acquisition of ZT Systems pursuant to the Equity Purchase Agreement for a purchase consideration of $1.6 billion (subject to adjustment for certain working capital and other items) consisting of $1.46 billion in cash consideration and a number of shares of the Company’s common stock valued at $150 million (at $130.32 market value representing 1.2 million shares). Pursuant to the acquisition agreement, the seller is also entitled up to $450 million in contingent cash consideration upon the achievement of certain financial metrics during the three-year period following the Closing Date. The Company also entered into a Manufacturing Services Agreement with ZT Systems on October 27, 2025 with an initial term of five years. This transaction will be accounted for as a business combination using the acquisition method of accounting. To finance the acquisition and settle all outstanding amounts under the Company’s Existing Credit Agreement, the Company simultaneously drew upon its Credit Facilities at the Closing Date.

The Company is in the process of determining the fair values of the acquired assets and assumed liabilities, with assistance from a third-party specialist. The initial accounting for the ZT Acquisition is incomplete due to the proximity of the transaction date to the filing of the Annual Report on Form 10-K for the fiscal year ended September 27, 2025. The preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed are anticipated to be completed in the first quarter of fiscal 2026. The preliminary allocation is expected to result in the recognition of goodwill, intangible assets and tangible assets such as accounts receivable, inventories and property, plant, and equipment. The major classes of liabilities assumed are anticipated to be accounts payable, accrued liabilities and other long-term liabilities.

See Note 6, “Debt” of the notes to the Consolidated Financial Statements contained in this report.