Intel, Altera Reportedly Resume Acquisition Talks

By Jeffrey Burt  |  Posted 2015-05-18 Print this article Print
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According to media reports that come more than a month after Altera rejected Intel's initial bid, the two sides could reach a resolution within weeks.

Intel reportedly is back in talks with Altera about buying out the smaller semiconductor vendor more than a month after negotiations broke off when Altera rejected Intel's offer of $54 a share.

According to reports in both CNBC and the New York Post, a resolution to the talks one way or the other could be reached relatively quickly, within a few weeks. Neither Intel nor Altera officials are commenting to journalists on the reports.

Reports of Intel's interest in Altera began circulating earlier this year. Intel chips dominate the PC space, but as PC sales have slowed over the past several years in the wake of growing competition from smartphones and tablets, company executives have been pushing to extend the chip maker's reach into other growth areas, including mobile devices and data center systems—such as storage and networking—and the expanding Internet of things (IoT).

At the same time, the vendor has been growing the capabilities in its server chips, including adding accelerators like GPUs and field-programmable gate arrays (FPGAs), which are becoming increasingly important in cloud and Web-scale environments. Altera makes FPGAs, which can be programmed through software and are becoming increasingly popular as accelerators that improve system performance while keeping power consumption down.

The two companies already work together, with Intel in 2013 announcing it would start manufacturing Altera's ARM-based quad-core Stratix 10 processors. A year later, the company extended the partnership to include multi-die devices, integrating Altera's FPGAs and systems-on-a-chip (SoCs) with other components—from memory to application-specific ICs to processors—into a single package.

Given that, it wasn't surprising that Intel would want to bring Altera into the fold. According to reports last month, Intel officials in February, after looking at publicly available information about Altera, at first talked about a price of $58 per share, according to Reuters. Intel later signed a non-disclosure agreement and started reviewing Altera's non-public information before deciding to lower the offer to $54 a share, which at the time would put the overall acquisition price at about $10.4 billion.

Altera's share price reportedly has increased by more than 2 percent since talks ended, and a deal now appears to be in the range of $13 billion.

Though Altera rejected Intel's initial offer, Patrick Moorhead, principal analyst with Moor Insights and Strategy, told eWEEK at the time that the rejection seemed more like a negotiation ploy by Altera rather than the ending of talks.

"I'm not convinced the deal is over," Moorhead said. "This could be the second or third wave of discussions."

There also were reports that, after Altera's board of directors rejected the initial offer, Intel may turn its attention to Broadcom, or that it could try a hostile takeover of Altera.

The reports about negotiations resuming come days after Intel executives announced they were partnering with eASIC to bring application specific integrated circuits (ASICs) to custom Xeons that can be used in enterprise data centers and cloud environments as part of the company's larger push to adopt accelerator technologies.

Moorhead said ASICs are best used for such applications like video encoding and decoding, where standards rarely change. FPGAs, given their ability to be reprogrammed to meet workload demands, are better in environments where the software is more apt to change, he said.



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