Intel Corporation (NASDAQ: INTC) announced today that it will acquire Altera Corporation (NASDAQ: ALTR) for $54 a share, which is equivalent to $16.7 million. The acquisition will be entirely paid in cash. After the announcement this morning, shares of Altera jumped 6 percent crossing the $51.8 a share mark.
This is the second acquisition/merger in the semiconductor sector in less than a week, and the third one this year. On May 27th, Avago Technologies (NASDAQ: AVGO) agreed to pay $37 billion in both, cash and stock for a deal with Broadcom (NASDAQ: BRCM). Earlier in March, NXP Semiconductors NV (NASDAQ: NXPI) announced the buyout of Freescale Semiconductor Ltd (NYSE: FSL). The semiconductor sector is shrinking, and we can expect chip prices to rise over time.
The main goal of the acquisition is for Intel to expand and diversify their product line, which currently mostly constitutes from rather traditional chips designed for personal computers and servers. Altera gives Intel access to programmable chips that are specially designed to be adoptable for various devices.
CEO of Intel, Brian Krzanich, said in a stamen, "Intel’s growth strategy is to expand our core assets into profitable, complementary market segments… With this acquisition, we will harness the power of Moore's Law to make the next generation of solutions not just better, but able to do more.”