Altera, a specialist in programmable chips – and an Intel takeover target – reportedly called off discussions with the US chip giant due to disagreement over valuation.
According to Bloomberg, Intel offered Altera around $54 per share, which is a 50 per cent premium to the chipmaker’s share price before news of talks first surfaced.
Reuters, citing a person familiar with the matter, said Altera rejected the offer and put an end to negotiations, which CNBC reported had been going on “for months”. Reuters noted, however, that Altera’s share price still rose, suggesting some belief that an Intel takeover might still be on the cards.
Neither Intel nor Altera have made official comment about the matter, but some anaysts expressed surprise that Altera had not snapped up Intel’s offer.
“Investors are going to demand some explanations,” said RBC Capital Markets analyst Doug Freedman, quoted by Reuters. “If the board and management can’t show a plan that would create a value at or above what Intel is offering, they are going to have to justify why they are saying no.”
Gus Richard, an analyst at Northland Securities, appeared more incredulous. “What are they thinking?” he said, referring to Altera and quoted by Bloomberg. “They’re going to come under a huge amount of pressure to take that offer. Earnings aren’t going to be that great.”
If Intel’s all-cash offer had been accepted, it would have represented the biggest acquisition ever by the US tech giant. Altera, buoyed by rumours of an Intel takeover, has a market capitalization in excess of $12 billion.
A fabless company, Altera specialises in field-programmable gate arrays (FPGAs) – chips that can be re-programmed after they have been manufactured. It is a market in which the Silicon Valley outfit dominates, along with Xilinx.
In 2013, Intel struck a deal to manufacture Altera chips in its foundries.
A tie-up with Altera might not help Intel get a stronger foothold in the smartphone market – an area in which it has struggled to compete against chip designs from UK-headquartered ARM Holdings – but its chips are widely-used in base stations.
The strength of Altera’s FPGA business helped grow annual net sales by 12 per cent, to $1.9 billion, during 2014. “We are outpacing the semi-conductor industry,” said Altera chief executive John Daane when full-year financials were published. He could also point to a respectable 7 per cent increase in net income, to €472 million.
Altera is also looking at next-generation mobile networks. At this year’s Mobile World Congress, and in partnership with China Mobile, Altera demonstrated a cloud radio access network (C-RAN) platform, targeting virtualised 5G wireless networks.