Altera (ALTR) to be Acquired for $16.7B by Intel

Shares of Altera Corporation (ALTR) were trading up +2.75 or +5.63 percent to $51.60 per share in Monday's premarket after announcing that Intel (INTC) would be purchasing the chipmaker in a deal worth $16.7 billion. Altera stock closed at $48.85 per share, up +1.88 or +4.00 percent in Friday's regular trading session.

Founded in 1983, San Jose, California based Altera Corporation is a domestic manufacturer of integrated circuits.
The company focuses on programmable logic devices or PLD's, field programmable gate arrays or FPGAs and complex programmable logic devices or CPLDs. The company's main products include Quartus II design software, Enpirion Power SoC DC-DC power solutions, the Stratix, Cyclone and Arria FPGAs and the the Max series CPLDs. Altera stock is both a component of the Nasdaq-100 and the S&P 500 stock indices.

Santa Clara, California based Intel Corporation is the world's largest maker of semiconductor chips by revenue. Founded in 1968, the company owns a slew of important patents for microprocessors and processors used in most personal computers including the x86 microprocessor series and the Pentium processor. Intel invented the world's first commercial microprocessor in 1971.

Intel had bid $54 per share for Altera in early April, but the bid was rejected by Altera at the time. The acquisition talks resumed in May with another possible $54 per share bid, but talks were inconclusive. After the conclusion of the latest talks, Altera reported lower than expected quarterly earnings on April 23rd, which prompted a large shareholder, TIG Advisors to call on fellow shareholders to vote against Altera's lead independent director T. Michael Nevens at the company's May 11th annual meeting and resume talks with Intel.

According to TIG Advisors, the Altera board was forgoing "substantial and immediate value realization for stockholders in pursuit of murky strategic goals. And that those stockholders should have the right to decide on Intel's $54 per share bid and an uncertain future for the company on its own.

In a Citi research report dated April 9th entitled "Altera Throws Away Golden Ticket , the analyst noted that, "For ALTR shares to reach a mid-$50s price organically, Altera would need to generate $2.70 in EPS, which is unlikely to happen over the next few years given the outlook for a secular decline in worldwide base station deployments in 2016-2019 until 5G starts ramping.

Altera reported its sales had dropped nine percent in the first quarter to $94.9 million or $0.31 per diluted share versus $111.1 million or $0.36 in the previous quarter and $0.37 in the same quarter one year ago, which was a catalyst for the company to return to the negotiating table with Intel. Today is the day that a standstill agreement between Intel and Altera expires, giving Intel the green light to proceed with a tender offer. As of this writing, Intel and Altera just issued a press release confirming the all-cash $54 per share takeover of Altera by Intel in a deal worth $16.7 billion.

Other News About ALTR

Altera FPGAs Help Enable Deployment of Harris Corporation's Latest Falcon III Wideband Tactical Radio

The company's field programmable gate arrays will be incorporated into Harris Corps Falcon III radio used by the U.S. military.

Altera Announces Industry's First 5G Algorithm Innovation Competition

The 5G University competition is part of the Innovate Asia FPGA Design Contest.

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Published on Jun 1, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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