Intel announced Monday that they buy up the American semiconductor specialist Altera.
Acceptance of a bid of $ 54 a stock comes after a few months of rumors tough negotiations.
Also read: Intel sniffs the record acquisitions
The purchase price that is paid in cash is $ 16.7 billion, which is equivalent to 130.6 billion dollars.
Rekord Buy
That’s 11 percent higher than Altera’s market Friday. The offer premium is 56 percent of the market value in late March, when the possibility of a takeover began to swirl.
Never before in its 47-year history, Intel has been close to an expensive acquisition. Previous record was set with the acquisition of McAfee in 2010, but the sum they flipped up the time it was below half of what they pay now.
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FPGA
What is the worlds largest processor manufacturer now has bought off?
Altera is one of only two companies that share the lion’s share of the market for so-called FPGAs or field programmable gate arrays. These are circuits and system chips that can be programmed by the customer after delivery.
Or to put it another way. Manufacturers of electronic equipment can utilize the same physical FPGA chips for different tasks. There may be cost-effective compared with dedicated chips, which functionality is fixed in the circuits.
Xilinx, including those with headquarters in Silicon Valley, the only real competitor. Together they control over 80 percent of the FPGA market.
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Partners
Intel CEO Brian Krzanic laws still increased performance at a lower cost, and highlights the promise of Moore’s Law as the reason behind record acquisition. The image is from a previous occasion when he presented a tiny Quark chip. Photo: Intel
Intel and Altera had before the merger close cooperation. Altera is one of very few external has used Intel’s factories and 14 nanometer manufacturing process for the latest generation of its Stratix FPGAs.
Altera’s single largest business area is within telecom and wireless equipment that amounts to over 40 per cent of turnover. Huawei and Ericsson are the two largest customers.
Moreover, they deliver circuits and system chips to a plethora of other verticals, including aerospace, military communications equipment, industrial systems, and also the consumer.
The total turnover the last year for $ 1.9 billion and a net profit after tax of $ 472 million. Intel’s revenue was by comparison $ 55.9 billion with $ 11.7 billion to the bottom line.
– This was expensive
Analysts are divided on Intel’s record purchase. More highlights positive synergies. Meanwhile, the price they pay perceived as very high. Here are some ideas (via TheStreet):
“We do not like Intel’s acquisition of Altera. We see things not own opportunity or rationale for why Intel will take parting with almost $ 17 billion. Specifically, we disagree with Intel’s assumption of a CAGR (compound annual growth rate) of 7 percent for the business. Altera has grown with a negative CAGR of 2 percent, “writes analyst Ambrish Srivastava at BMO Capital Marketsi a report. He is particularly wary of price Intel pays, and argues that they believe Altera isolation is only worth $ 28 share, ie half of the Intel scroll up.
John Pitzer from Credit Suisse is another analyst who experience acquisition as expensive. In a note he makes the point that Intel seems to pay a sum that exceeds Altera’s overall cash flow over the next 20 years.
“Intel pays a premium for Altera, but acquisition highlights Intel’s profit within data center, which we expect will exceed client PCs for the first time in 2017. It signals a shift for Intel over from PCs to data centers “writes Jeffries analyst Mark Lipacis.
Future data
Intel says that they expect benefits of combining the two companies’ strengths in particular in the segments data center and the Internet of things. In an announcement alerts also plans to offer Altera FPGA products in combination with Intel Xeon processors.
– With this acquisition we will take advantage of Moore’s Law to ensure that the next generation of solutions not only improve but also able to do more. Our customers expect better performance at lower cost whether it is about enabling new growth in networks, large cloud datacenters or Internet of Things segment. This is the promise of Moore’s Law, and this innovation becomes possible by Intel and Altera joins, says Intel CEO Brian Krzanich in a statement.
Moore’s Law, formulated by one of Intel’s founders (Gordon Moore) shall ensure that the world supplied with faster and more efficient computer chips in a few years remain. Already in 2018 rains chip giant to have shrunk its process manufacturing right down to seven nanometers.
Intel earlier this year: Therefore, Moore’s Law is still relevant
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