Intel close to deal to buy Altera for $16 billion: sources

30 May 2015 | Author: | No comments yet »

Intel Said to Be Near Altera Purchase as Chip Deals Accelerate.

SAN FRANCISCO—A potential deal for chipmaker Intel to buy Altera could help the company further diversify the market for its chips beyond personal computers into cloud computing.Intel Corp. is near a deal to acquire Altera Corp. in a purchase that will take out yet another chipmaker and add to a record year for industry consolidation, people with knowledge of the matter said. The world’s largest chipmaker may reach a deal for Altera as soon as this weekend, the people said, asking not to be identified discussing private information. The New York Post, citing a source close to the situation, reported that Santa Clara, Calif.-based Intel was close to completing a $15 billion acquisition deal for its smaller rival.

The company makes integrated circuits called Field Programmable Gate Arrays (FPGAs) which can be reconfigured and reprogrammed, making them very flexible. “FPGA’s are used in cellular phone networks at the base station, so you use them every day on the other side of your phone connection,” said Mark Hung, an analyst with Gartner Research. Altera’s earlier rejection spurred some shareholders to pressure the company to reconsider an offer they thought valued Altera higher than it could reach on its own. The largest deal ever in the $300 billion semiconductor business was announced Thursday when Avago Technologies Ltd. agreed to buy Broadcom Corp. for $37 billion.

In March, Freescale Semiconductor, which makes chips used in cars, agreed to a $11.8 billion cash and stock take-over by Dutch chipmaker NXP Semiconductors. If such a deal is in place, when it expires on Monday Intel would be free to begin a hostile takeover attempt if a purchase price has not been agreed on. “Whenever you’re trying to buy a company, it’s always better when the management team agrees to the takeover, that’s always the preferred route.

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