Intel Corporation (NASDAQ:INTC) is near to a deal to acquire smaller chip manufacturer firm Altera Corporation (NASDAQ:ALTR) for about $15 billion. The acquisition price is expected to be as much as $54 per share, a 15% premium over ALTR’s Thursday closing price.
The New York Post reported that deal is expected to finalize by the end of next week. However, it also cautioned that there is a probability that the deal negotiation could still fall apart. Altera’s share price hasn’t traded above level of $50 per share in nearly fifteen years. Tig Advisors, a hedge fund with a stake in company launched a campaign against Altera’s lead director T. Michael Nevens in order to bring the talks back to the table.
The details
Intel finalized a standstill deal earlier in 2015 with Altera Corporation that expires on June 1, 2015 providing the world’s largest chipmaker firm an option to propose a hostile bid after that. The small chip maker rejected an unwanted $54 a share acquisition offer from Intel following months of deal talks.
The chipmakers industry witnessed one of the largest merger in its history as Avago Technologies Ltd (NASDAQ:AVGO) agreed to acquire Broadcom Corporation (NASDAQ:BRCM) in a deal valued at $37 billion. The industry can see more such deals in the coming months.
The significance
Acquiring Altera may go a long way to help Intel extend and defend its most profitable business segment, supplying server chips utilized in data centers. The sales of chips for Personal Computers are declining as more and more consumers now rely on Smartphones and tablets to get online.
However, the data centers is one such segment that need to get services and information for those mobile devices. The specific segment results in increased demand for higher-end Intel processors. It was evident in the first quarter numbers as revenue at Intel’s data-center segment jumped 19%.
