Intel to Buy Altera for $16.7 Billion

01 June 2015

In yet another major acquisition deal for the semiconductor industry, Intel Corp. will buy programmable logic vendor Altera Corp. for about $16.7 billion under the terms of a definitive agreement between the two firms announced June 1.

Intel (Santa Clara, Calif.) said it would pay $54 for each share of Altera. The deal would be the largest in Intel’s history and another major takeover in an unprecedented wave of consolidation in the semiconductor industry’s history. Major deals already announced this year include Avago Technologies Ltd.’s $37 billion deal to acquire Broadcom Corp. announced May 29—which would be the largest acquisition in the history of the semiconductor industry—and NXP Semiconductors NV’s $11.8 billion acquisition of Freescale Semiconductor announced in March.

Intel (Santa Clara, Calif.) and Altera (San Jose, Calif.) were negotiating a buyout deal in March, but the talks collapsed when the two firms couldn’t reach an agreement on price. The $16.7 billion price tag is close to what Intel offered in March, according to a report by the Wall Street Journal.

The acquisition of Altera, which is still subject to customary closing conditions including shareholder approval and regulatory review, would help Intel in numerous markets including the server computer market, where more flexible field programmable gate array (FPGA) and processor combinations are being rolled out (see Intel to Package FPGA with Xeon Processor). It would also help Intel reduce its reliance on the personal computer space, which has been declining for several years.

Intel says the combination is expected to enable new classes of products that meet customer needs in the data center and Internet of Things (IoT) market segments. Intel plans to offer Altera’s FPGA products with Intel Xeon processors as customized, integrated products.

Intel CEO Brian Krzanich says through a statement that Intel’s growth strategy is to expand its core assets into profitable, complementary market segments. “With this acquisition, we will harness the power of Moore’s Law to make the next generation of solutions not just better, but able to do more,” Krzanich says.

Intel and Altera announced a foundry deal in 2013. This foundry deal is one of the developments now seen as paving the way for Intel to buy the programmable logic vendor.

Intel says Altera will become a standalone Intel business unit. Intel says it also plans to continue support and development for Altera’s ARM-based and power management product lines.

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