While Intel Corporation (NASDAQ:INTC) is planning to acquire Altera Corporation (NASDAQ:ALTR), the speculations regarding the benefit of this deal to shareholders have already kicked in. according to a Citigroup Inc (NYSE:C) analyst, Christopher Danely, the acquisition will bring in good rays of hope for the competitors of these two companies, Xilinx, Inc. (NASDAQ:XLNX). But, he opined, the benefit to Xilinx or Intel shall depend on the headwinds that might face them.
The Plus and Minus of the Speculated Deal
According to Danely, the acquisition will prove to be optimistic for the Altera’s stock, but will not grant a kick start to the business. So, this implies that strategically or from the business point of view, Altera will be at a lower end. Contrarily, talking in terms of Intel’s benefit, the deal will bring on just a tinge of positivity to its business because of Altera’s faster growth and high-end margin.
Even though, both the companies have decided to remain mum to this speculation, but analysts are expecting that if the deal is to be sealed in just a few times, it may be valued at approximately $13.6 billion.
Does the deal make sense?
While giving an interview to Benzinga, an analyst at Global Equities Research, Chowdhry said that the merger is making sense because at present, the scenario of semiconductor industry is reaching a phase where there is no fair value of the intellectual property.
According to Chowdhry, designing of the chip is the most intricate part of the digital economy, apart from being its focal point too. He believes that there is no respect for the intellectual property, and at present, apps are being treated as more valuable.
He therefore opines that the only possible way of survival for the semi-conductor companies is by consolidation. In case of consolidation, he believes, the players will reduce and companies like Intel or alike, will start emphasizing on valuation and patents.
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