Intel is close to cutting a deal to buy Altera Corp for around $15 billion, says a report from the New York Post, which cites a source familiar with the matter. The report suggested that the deal price could be priced at around $54 per share, a 15% premium over Altera’s Thursday closing price of $46.97.
Altera deal could fall apart
“A deal is likely by the end of next week,” according to the newspaper’s source, but the source revealed that the deal could still fail. The largest chip maker has a standstill agreement with Altera that will expire on June 1, giving Intel an option to place a hostile bid after that, as per Reuters.
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In April, Altera turned down the unsought $54 per share offer from Intel after months of discussion. As of now, there have been no comments from either Intel or Altera about the developments.
Intel not interested in Broadcom
Intel is apparently not looking to place any counter deal against Avago Technologies for Broadcom, says the report. On Thursday, Avago agreed to pay $37 billion for Broadcom.
Stacy Rasgon, a senior analyst at Bernstein Research, believes a bid of $25 per share from Intel to buy Broadcom would have made a lot of sense last year, but a $60 bid now would not be seen as logical. Intel is not interested in Broadcom even though it was potentially aware of the opportunity. Intel’s knowledge of Broadcom being on sale is obvious because JPMorgan’s Kurt Simon, who is Intel’s banker on the Altera acquisition, is also Broadcom’s sell-side banker.
Broadcom founders hold 47% voting rights and will be appointed to significant roles at Avago. For instance, Henry Samueli will be the chief technology officer at the combined company. Citing a source, the report says that the founder will not be that interested in becoming a part of Intel.
Intel aiming at high margin segments
On Thursday, Goldman Sachs stated that diversification in high-growth margin and revenue streams is the top priority of Intel at present. The firm said that the chip maker is looking to expand its technology in traditional PCs into the wider compute total addressable market. On the stock, the sell-side firm reiterated its Sell rating with a target price of $23.
On Thursday, Intel shares closed up 0.89% at $34.01, and year to date, the stock is down by almost 8%.