While a deal between Altera Corporation (NASDAQ:ALTR) and Intel Corporation (NASDAQ:INTC) may be announced soon (or maybe it is just a rumour), an important announcement has been done by an analyst at Deutsche Bank AG (USA) (NYSE:DB). According to the analyst, Ross Seymore, the combined deal will remain clutter-free, sans the regulatory issues. Seymore commented that the deal can go ahead since it is making sense strategically.
The analyst’s view on Altera-Intel deal
The analyst said that strategically, the deal will make a good sense. This is so because Altera is in need of cutting-edge technologies, while Intel needs expertise in the process technologies area. However, he added that Intel had announced about its share repurchase program worth $20 billion, in 2014. But it is most likely impossible to strike a deal of this stature. If the deal will occur, the price that Intel will pay to Altera on its shares will be somewhere near $40s (plus or minus).
Why Intel desires for Altera?
If this deal happens, it would be perhaps the largest kind of potential acquisition in the history. This deal would undoubtedly be the strategic victory of Intel, but there are other reasons of the desired deal. Altera comes at the #1 position at application-specific integrated circuit (ASIC) top most cell standard suppliers, when it comes to revenue. But, because of increase in the price of transistors, ASIC as well as ASPP, also called application-specific standard products have been under pressure.
Altera wants to create its position in the market as one of the largest manufacturers and producers of FPGAs, PLDs as well as field-programmable gate arrays. The company is looking to replace ASIC and ASSP. If it is to be seen this way, then the replacement opportunity of these two products alone, will allow Intel to have a growth which will be twice faster than the entire industry of semiconductors. This is what Intel is looking forward to.
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