WSJ: Intel to announce $54/share Altera deal on Monday

[Daniel Nenni]

According to sources "familiar" with the deal Intel will acquire Altera for $54 per share ($16.2B) on Monday. When the rumor first hit Altera was trading at around $34 a share which is close to a 60% premium. It all started with a Tweet from a New York WSJ reporter:

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You have to ask yourself, self just how did this New York Soccer fan get news of a landmark Silicon Valley acquisition? Coincidentally, less than a minute after this Tweet there was a 300,000 share trade made that netted a $2.4M profit by the end of the trading day. The SEC is investigating of course.

From what I’m told “bankers” routinely leak this type of information as part of the acquisition strategy either to get other parties interested or just to drive up the price. How is this legal?

Also from what I'm told by sources close to the deal (wink wink) this all really started with the Altera Form-8K filed last October:

https://vps816.urljet.com:2096/cpsess559239789/3rdparty/squirrelmail/src/webmail.php

Which contains "change of control and severance agreements " for the Altera executive staff. I'm no expert on golden parachutes so maybe someone reading this who is can enlighten us as to how this compares in the executive parachuting landscape.

I'm sure the truth will come out at some point in time but to me this whole deal looks to be shady business as usual on Wall Street.

 

[Arthur Hanson]

Altera got pressured by major holders to take the deal offered when they walked away wanting for a higher price. I wrote about the deal not occurring over price the last time they did the dance. Altera management wanted more, but the big holders call the shots, or else.

 

[wallisweaver]

I have to say that I'm not terribly concerned about the short term action on the Altera acquisition. Those who determine such actions are not close enough to the situation to make an intelligent and reliable assessment. That being said, it appears to be deemed a positive move for Intel although a bit pricey. I think the acquisition is already mostly priced in. This is based on the fact that Wall Street largely missed the server/data center impact on the last earnings report and continue to be somewhat oblivious about the obvious growth story.

For me, the story is about Intel locking up the next move up in server/data center technology. As such this appears to be Intel guaranteeing the future of its server/data center growth story and market share. This is Intel leaping out in front again - to where ARM and Xilinx either can't go or can't go in the short to medium term. It gives Intel an expanded technology lead in their most important profit center.

If I had a bit more respect for Wall Street's understanding of the technology issues, I would be more optimistic about a significantly positive (additional) immediate Altera-related bump. Of course, Intel seems to be moving up nicely now based on a wide array of positive developments. I expect this to continue but I'm really just trying to do some incremental buying in prep for the second half of the year when a lot of the positive developments will manifest themselves.

 

[Daniel Nenni]

This looks to be a great start for a more in depth discussion:

For now, here are five reasons behind Intel's interest in Altera:

1. By acquiring FPGA technology, Intel is thinking outside the CPU, now that the execution of tasks is increasingly off-loaded to graphics processors and other accelerators.

2. Having its own FPGAs will strengthen Intel's server offerings. Server chips are cash cows for Intel, and they are gaining more importance as the PC market slows down and as Intel struggles to sell tablet and smartphone chips in its floundering mobile business.

Intel is offering customers, such as server makers and companies building data centers, the option to package server chips with third-party FPGAs, which are being used for dedicated functions like search, sorting and character matching. Companies like Microsoft and Baidu have put FPGAs to good use in data centers.

3. Intel's factories are under-used, so working on FPGAs, which are big and complicated to make, will increase their workload and help Intel justify the billions it spends on advancing its manufacturing technologies.

4. Intel hopes to get a boost in the Internet of Things market. FPGAs are being used in IoT implementations, such as smart city and factory automation systems, and at the center of IoT's fast growth is communications equipment, which also use FPGAs. The acquisition would also make Intel the backbone of many IoT installations, which means an opportunity to up-sell more products.

5. The acquisition would also hurt competitors using Altera products. If Intel's Altera acquisition is completed successfully -- it's expected to close in the next six to nine months -- IBM and ARM will be left scrambling to seek other FPGA options for their server products. Altera's competitors include Xilinx, Microsemi, Lattice and others.

5 reasons why Intel wants to buy Altera | Computerworld