Intel to buy Altera for $16.7 billion in its biggest deal ever

Mon Jun 1, 2015 2:17pm EDT
 
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By Lehar Maan and Liana B. Baker

(Reuters) - Intel Corp (INTC.O: Quote) agreed to buy Altera Corp ALTR.O for $16.7 billion as the world's biggest chipmaker seeks to make up for slowing demand from the PC industry by expanding its line-up of higher-margin chips used in data centers.

By combining with Altera, Intel will be able to bundle its processing chips with the smaller company's programmable chips, which are used, among other things, to speed up Web-searches.

Intel said on Monday it would offer $54 per share for San Jose, California-based Altera, a 10.5 percent premium to Altera's close on Friday.

Altera's shares were changing hands at $51.78, well below the offer price, in afternoon trading.

That suggested that some investors felt the deal could face regulatory hurdles, but analysts said there was virtually no overlap of products between the companies.

Intel's shares were down about 1.7 percent at $33.86.

The deal valued Altera at about 9 times forward revenue, according to Thomson Reuters data.

"It seems very high to me," Stifel, Nicolaus & Co analyst Kevin Cassidy told Reuters. "The last one I remember that was close was Broadcom buying NetLogic at 8 times forward revenues, and that didn't turn out very well for Broadcom."   Continued...

 
Indonesian youth walk past an Intel sign during Digital Imaging expo in Jakarta March 5, 2014. REUTERS/Beawiharta (INDONESIA - Tags: BUSINESS LOGO SOCIETY) - RTR3G2J1