The world’s largest chipmaker, Intel Corporation (NASDAQ:INTC), is reported to be in talks for acquiring Altera Corp. and add to what is already the strongest start on record for takeovers in the industry.
Intel was also rewarded with an intraday gain by investors, which was reported to be the biggest in six years. Not to mention, it’s quite a possibility that the $149 billion company’s foray into the buyers’ circle may give other semiconductor makers facing lackluster growth more incentive to make their own acquisitions.
On the other hand, Texas Instruments is evident enough for its absence from the M&A flurry. 2011 was the last takeover of a $61 billion company. As per lan lng of MKM Partners, on the other hand, Atmel, Silicon Laboratories and Microchip Technology are among potential targets still standing. Each one offers a steady business with ample cost-cutting opportunities as part of a larger company.
According to Gavin Slader (a managing director in the investment-banking group at JMP Securities) in a phone interview:
“There’s absolutely more to come. I would almost say anyone who hasn’t pondering a deal at this point has either got to be thinking about selling themselves or being acquisitive.”
According to Nomura Holdings’Romit Shah, in addition to this, Broadcom Corp.could draw takeover interest with a market value of US$ 26 billion.
There was no comment provided by representative for the Irvine, California based company. However, representatives for Austin, Texas-based Silicon Labs, San Jose, California-based Atmel and Chandler, Arizona-based Microchip Technology said their companies don’t comment on speculation.
Intel is set to report a 0.4% drop in revenue in 2015, its third decline in four years. Buying Altera would augment Intel’s dominant position in data centers and help the Santa Clara, California-based company expand in industries such as communications infrastructure and industrial applications, Pacific Crest Securities analysts, led by Michael McConnell, wrote in a report Sunday.
According to FBR’s Rolland:
More takeovers mean fewer available targets, and that could move big companies such as Broadcom further up on acquirers’ shopping lists. Broadcom’s enterprise value of US$ 22 billion is about 13 times its free cash flow in the last year, a lower multiple than most other similar-sized U.S. chipmakers. Intel could be interested and will still have capacity for an acquisition like that even if it completes a takeover of Altera.
