According to CNBC, Intel has reportedly ended its talks with Altera about a potential acquisition, citing people familiar with the negotiations.
The deal would have been the largest in Silicon Valley since Facebook acquired the text messaging service WhatsApp.
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Intel reportedly ends talks to acquire Altera
As reported by ValueWalk, as of last month, Intel was said to be in discussions with Altera about buying it out. Following the news, Altera shares jumped as much as 24% to a high of $42.96, while Intel’s stock surged 6.3% to $31.98 per share.
Altera is the US maker of processors used in data centers, while Intel is the world’s largest chip maker. If Intel and Altera sealed a deal, it would have been Intel’s largest acquisition in its history.
Altera designs chips for cars, phone networks and other devices. Gobbling up Altera would make a lot of sense for Intel as it struggles to expand its operations and gain a foothold in chips for mobile devices. Interestingly, Altera and Intel have worked together in the past.
However, citing people familiar with the developments, CNBC reports that Intel has stopped its talks with Altera about a potential acquisition. According to the sources, the two companies haven’t spoken in more than a week.
Disagreement over price
Citing knowledgeable sources, CNBC reports that Intel’s offer was in the neighborhood of the low $50-range per share, and that the talks had taken place over several months. The talks between the two companies had ended because of a disagreement on price.
Intel is said to have made an all-cash offer for Altera in the low-50s, which was rejected. Despite both Intel and Altera talking for months, and a good amount of due diligence on Intel’s part, they were reportedly unable to agree on price.
Resonating with the latest developments, Altera stock dropped about 10% in pre-market trading, while Intel stock traded down over 2%.
Last month, reacting to the potential acquisition of Altera by Intel, analysts at Pacific Crest Securities suggested that the merger could aid Intel strategically as it could increase the world’s largest chip maker’s diversity outside of PCs, and provide the company with an opportunity to expand in the communications, infrastructure and industrial verticals.
Moreover, it was felt the deal could strengthen the chip maker’s dominant position in the data center market. The research firm also indicated that the acquisition would enable Intel to “scale its nascent foundry business and use its best-in-class manufacturing to improve Altera’s competitiveness long term”.