Tech titans Intel and Altera reportedly resumed takeover talks that could result in a more than $13 billion deal, claims a report from the New York Times. Previously, the discussions between the two chip makers fell apart due to the lack of consensus over the price.
Intel Altera resume talks, outcome within a week
Citing a person familiar with the matter, the report says the outcome of the talks could be sooner than most expect. “You should not be surprised if a deal comes together quickly,” the report said, citing a source with direct knowledge of the talks.
Takeover talks between the two first surfaced in March, when reports suggested that the potential deal could exceed $10 billion, making it the biggest acquisition for Intel ever. Intel, which is much larger than Altera, is trying to diversify its operations owing to the declining demand for the PCs.
Both Intel and Altera are vital players in the semiconductor industry, and more importantly they lead in separate areas. Intel primarily produces chips for personal computers and server systems, while Altera dominates programmable chips that can be used in the consumer electronics, autos, etc.
Resumed talks from pressure from Altera’s shareholders?
Previously, the deal between the two ended, when Altera reportedly rejected a $54 bid from Intel. In March, when the talks first began, Altera shares were trading around $35. Even after the talks between the two collapsed, Altera shares were trading higher, suggesting investor’s optimism over the deal.
The resumed takeover talks could also be the result of a mounting pressure over the company’s management from Altera’s shareholders. Last month, TIG Advisors LLC, an investment firm holding a stake in Altera, criticized T. Michael Nevens, Altera’s lead independent director, who was against the deal.
Considering recent events, Stacy Rasgon, a senior analyst at Bernstein Research, said, “This is turning into a soap opera.” Rasgon believes that even though Intel is teaming with start-up eASIC, it would not affect the chip makers desire to buy Altera. Referring to eASIC’s area of focus, which is to enhance computer speed, the analyst says, “It is a whole other level of programmability.” There have also been reports that Avago Technologies is interested in Altera competitor Xilinx, but the talks are still in early stages.
As of now, there have been no comments from either party. Following the news of resumed talks, Altera shares were up over 7% in pre-market trading on Monday