Intel Corporation M&A Chief Must Get Altera Deal Right

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Intel closed the $16.7 billion Altera acquisition on Monday. Wendell Brooks, who now heads the chip maker’s merger and acquisitions efforts, says he has an extra inventive to ensure that the chip maker’s biggest acquisition performs better than previous ones.

What’s the incentive for Brooks?

Prior to Altera, Intel’s biggest deal was the $6.59 billion acquisition of McAfee in 2011 and the $1.4 billion acquisition deal with Infineon Technologies AG’s baseband unit in 2010. Both deals failed to show the expected profits for the chip maker or have not given any headway to the chip maker in the mobile segment, says a report from Bloomberg.

“As the new guy here, I’m not going to get the benefit from my board or my shareholders to do future M&A if I don’t get this one right, so I’m very much focused on improving our track record,” Brooks said.

Brooks, a former investment banker, joined the chip maker in August 2014.

How Intel plans to make this deal a success

To make this acquisition a successful one, Brooks said the company has focused on integration planning as an important parameter for approving the acquisition. The executive said he has increased integration staffing by three times and is not changing Altera’s core engineering teams or sales force. Intel says its Altera acquisition will also serve as a model for its future big acquisitions.

“We’re doing things very differently than we have in the past,” Brooks said, adding that the chip maker is looking beyond its traditional in-house development to make the integration meaningful.

Altera a good fit

With the acquisition of Altera, Intel has added programmable chips to its portfolio to further strengthen its position in the server market and also expand in new segments like the use of computing in cars and industrial equipment. Though Altera’s $1.9 billion sales in 2014 appear tiny in front of Intel’s $55 billion, the integration of the two will open up new markets for Intel. The chip maker also aims to improve Altera’s stand-alone performance by shifting its semiconductor production to its state-of-art manufacturing facility.

On Monday, Intel shares closed down 0.14% at $34.93, and in premarket trading today, shares are up 0.2%. Year to date, the stock is down by almost 4%, while in the last one month, it is up by over 1%.

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