Intel, Altera End Acquisition Talks
SAN FRANCISCO — A rumored deal between Intel and FPGA maker Altera is now dead, following reports of a price disagreement.
The Wall Street Journal and Reuters reported last week that Intel was in talks to acquire Altera for $13 billion, the company’s largest acquisition to date. According to Deutsche Bank, Intel had placed a low-$50 per share offer or approximately 45%-53% premium on Altera’s March 26 stock price. That offer “stands well above the ~35% average take-out premium for recent transactions,” a Deutsche Bank release stated.
The deal would help Intel diversify beyond the slumping PC market, EE Times reported last week. Intel is already Altera’s 14nm supplier, and analysts questioned whether the latter’s FPGA volumes — and $2 billion in annual revenue — were enough to justify a $13 billion price tag.
“We never thought it would happen because the impact on Intel’s revenues wasn’t big enough to justify the price premium,” International Business Strategies President Handel Jones told EE Times.
Intel doesn’t need a stake in a FPGA company when it has already carved out a significant portion of the data center market and telecoms. The next question will be whether Intel will continue to supply Altera in 10nm or if the company will return to TSMC for the next-generation process node.
“Assuming…[Intel’s] acquisition appetite remains, we believe [Broadcom] would then be among Intel’s most logical targets given its technology/product portfolio,” Deutsch Bank speculated in a release.
Deutsch Bank declined to comment further on its Broadcom statement but Jones said such an acquisition would be a boon for Intel — though not a likely scenario.
“Anything Intel could do to fill its applications value would be a win, but how they do it with is the question,” Jones said. “I think [acquiring Broadcom] would be a difficult thing to implement. If they do it, it has very good goal potential.”
Broadcom is unlikely to sell just a piece of its business, Jones added. It wouldn’t make sense for the Broadcom to get rid of any of its successful branches such as Ethernet, wireless or Internet of Things, which will likely expand in the smart home and automotive markets.