Giant chipmaker Intel is close into finalizing a deal with smaller industry player Altera. Reports are saying that the two companies are in the last leg of negotiations that could see $15 billion changing hands soon.
According to the Australian Financial Review (AFR), Intel is poised to acquire Altera and a formal announcement is likely forthcoming in the next few days. However, the same unnamed source cited by the publication has stressed that nothing is final on the deal and the talks could still fizzle out.
Intel is reportedly ready to pay up $54 per share of Altera but the Gazette Herald said in a report that the latter had already turned down an earlier bid with the same value. In April this year, Altera ended its months of discussions with Intel by rejecting an offer that would have given the former around 15 percent premium of it most recent worth.
Altera last traded nearing $49 per share at the close of the market last week.
Consolidation
The AFR dubbed the latest development as a solid indicator of consolidation trend in the global semiconductor industry. Prior to the rumored Intel-Altera deal, both Avago Technologies and Broadcom Corporation have confirmed that they will merge. Avago is said to spend $37 billion in order to purchase Broadcom.
Intel's latest move is seen to increase its flexibility in setting up sufficient room for planned expansion manuevers. As Altera specializes in field programmable gate arrays or FPGA chips, the takeover will benefit Intel opening up new opportunities aside from the company's main cash cow - providing processing chips for personal computer.
And expansion
"Intel may be seeking Altera to create computers that combine the power of a standard semiconductor with the flexibility of an FPGA," the AFR report said.
Essentially, Intel is looking beyond personal computers and by buying out Altera the company could is gunning to gaining significant foothold on other lucrative endeavors such as building servers for corporate data centers, the publication added.
As of writing, Intel and Altera have not issued official statements on the matter.
