Intel Corp. said Monday it will acquire fellow chipmaker Altera Corp. for $16.7 billion in cash in the biggest deal in the company’s history.
The deal will combine Intel’s manufacturing process with Altera’s programmable chips that can be configured for specific functions.
Intel, which employs about 400 in Fort Collins and Longmont, said the union of the Silicon Valley firms strengthens Intel’s future in cloud computing and the Internet of Things, in which chips are used in everyday objects, from sprinklers to thermostats, to allow them to be controlled using mobile apps.
“Whether to enable new growth in the network, large cloud data centers or IoT (Internet of Things) segments, our customers expect better performance at lower costs,” Intel CEO Brian Krzanich said in a statement.
The acquisition comes nearly two weeks after offer for $54 a share, which was the same price Intel offered Monday. The bid was 29 percent higher than Altera’s stock price, Bloomberg News reported. reportedly pressured the board to reconsider.
Analysts speculated that rival chipmaker Broadcom Corp. could be an alternative to Intel. Last week, , which has operations in Longmont and Fort Collins, for $37 billion, making it one of the largest mergers of chipmakers ever.
“Management teams are looking at their business and predicting little growth going forward,” Gus Richard, an analyst at Northland Securities Inc. News. “The M&A wave is a function of them trying to drive earning growth. Intel’s purchase of Altera is one of the few strategic moves that is being made currently.”
Intel has had operations in Colorado since about 2001, when in Colorado Springs that it acquired from Rockwell International.
By 2005, the company employed as many as 900 workers in Colorado Springs when it announced it would , where engineers today work on the Intel Itanium microprocessors. A opened a few years later and focuses on solid-state disk drives.
By the end of 2007, Intel .
The local impact of Intel’s purchase of Altera is not known. San Jose-based Altera doesn’t appear to have operations in Colorado, other than a sales office. Altera officials could not be reached for comment.
In its most recent quarter, which ended March 28, Intel said first-quarter revenues were flat at $12.8 billion due to the decline in its PC business. Sales were offset by growth in its data center, Internet of Things and non-volatile memory business. Net income grew to $2 billion, from $1.9 billion a year earlier.
Altera posted a 6 percent drop in revenues in its first quarter, ended March 27, to $435 million. Net income fell 19 percent to $94.9 million.
Altera’s stock price closed Monday at $51.68, up $2.83 or 5.8 percent for the day but still below Intel’s offer price of $54 a share. Two months ago, Altera’s stock was trading at $34.58.
Intel will fund the deal with cash and debt. The acquisition is expected to close within six to nine months.
Tamara Chuang: 303-954-1209, tchuang@denverpost.com or twitter.com/Gadgetress
