Negotiations have ended in Intel s reported plan to buy Silicon Valley memory chip maker Altera, apparently after the two parties failed to agree on price, according to a report Thursday.
An Intel spokesman said the company had no comment on the report by Bloomberg News that Altera had rejected an offer of about $54 a share, a premium of about 28 percent above Altera s current price. Altera s stock dived on the report, but quickly rebounded and was up slightly by mid-day.
If the report is accurate, investors will want to know what kind of plans management has to achieve a $50-plus stock price in the next number of years, said analyst Doug Freedman with RBC Capital Markets in a note on the reports.
We do not think that other bidders are interested in matching that or offering a higher price. We do think that other bidders could be interested in the business, but perhaps at a $45 offer.
Avago offers a much better business synergy than Intel, he said. AVago makes analog, digital, mixed signal and optoelectronics components that it sells to a wide range of customers.
Altera makes a versatile type of logic chip that is reprogrammable by its users. There has been an expanding market for this type of chip, which is taking on more chores in data centers that were once assigned to the processors Intel makes.
The deal was seen as a win-win by many analysts when it was first reported two weeks ago.
Intel foundries already make several Altera chips. A deal would allow Intel to increase the utilization of their chip factories and sell to customers that are using Altera s products around Intel s own chips, said chip analyst Jack Gold.
But analyst Stacy Rasgon, a semiconductor analyst with Bernstein, said when the proposed deal was first reported that it would be very expensive for Intel with a small or no upside. They would be spending money they don t have.
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