Intel has agreed to buy chipmaker Altera for $16.7 billion, as part of a plan to expand its line-up of higher-margin chips used in data centers. Bobbi Rebell reports.
Let the chips fall where they may- and they all seem to be falling together. Intel agreeing to buy Altera for $16.7 billion- $54 a share, about a 10 percent premium from Friday's closing price. The same price, by the way offered just a couple of months ago which Altera rejected. The smaller chip maker couldn't do better on price- and goliath Intel didn't budge says Patrick Moorhead, President, Moor Insights and Strategy. SOUNDBITE: PATRICK MOORHEAD, PRESIDENT, MOOR INSIGHTS AND STRATEGY (ENGLISH) SAYING: "Altera had growth challenges. They had muddled along for the last couple of years. You have Intel who has been really hinged upon the PC market and the data center market and they are looking for growth opportunities, and they are looking for ways to fill their factories, which when it comes to the type of business they are in is very very important." The deal is the third big one in the highly fragmented chip industry this year. Avago Technologies agreed last week to buy Broadcom for $37 billion in the industry's biggest-ever takeover. That followed NXP Semiconductors deal to buy Freescale Semiconductor for $12 billion. The move is part of Intel's efforts to expand beyond chips for PC's - which have been the company's lifeblood. The combination will allow Intel to bundle its processing chips with the smaller company's programmable chips, which are used, among other things, to speed up Web-searches. Intel is working to become more involved in the so-called Internet of Things - the concept of connecting ordinary household devices to the Internet. SOUNDBITE: PATRICK MOORHEAD, PRESIDENT, MOOR INSIGHTS AND STRATEGY (ENGLISH) SAYING: "They are very rapidly are getting their act together to be a player in the Internet of Things market, and Internet of Things is really about 50 different submarkets underneath it. But you can generalize it and you can talk about let's say the consumer side which I call the human internet of things and these things are like fitbits, exercise watches and things like that." This is Intel's biggest deal ever, overtaking its purchase of security software maker McAfee four years ago. Intel said the acquisition will add to earnings in its first year after it closes.