Intel buys Altera to defend its share in data centres

World’s largest chip maker announces acquisition of Altera for $16.7 billion in its biggest deal ever

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Intel agreed to purchase Altera for $16.7 billion to defend its 98 percent share in the higher-margin chips market used in data centers amid a slowing demand trend within the PC industry.

The chip giant said on Monday that it would offer $54 per share, an 11 percent premium over Altera’s closing price on Friday.

“The acquisition will couple Intel’s leading-edge products and manufacturing process with Altera’s leading field-programmable gate array (FPGA) technology,” Intel said in the statement.

“The combination is expected to enable new classes of products that meet customer needs in the data center and Internet of Things market segments.”

Altera’s shares were about $51.78 in the afternoon trading, while Intel’s shares fell 1.7 percent to $33.86.

Intel’s acquisition of Altera is also seen as a new means of growth for the chip manufacturer since the personal-computer market has begun declining from its peak in 2011.

Intel will have the opportunity to bundle its Xeon server chips – threatened by the latest Avago-Broadcom $37 billion deal – with Altera’s programmable chips, which can be used in a variety of markets, such as consumer electronics.

TRTWorld and agencies