Intel Corp is close to a deal to acquire the smaller chip maker Altera Corp for around $16 billion, according to reports citing people familiar with the matter.
A Reuters report indicates that Intel could offer as much as $54 per share for Altera, which is a 15 percent premium over the company’s closing price on Thursday of $46.97 – valuing Altera at over $16 billion.
The New York Post cited a source close to the situation who said that “a deal is likely by the end of next week.”
Last month year Altera rejected an unsolicited $54 per share offer from Intel.
Earlier this year Intel signed a standstill agreement with Altera that expires on June 1. Reuters said that after that Intel has the option to launch a hostile bid.
The potential deal represents further consolidation in the chip industry. Earlier this week Avago agreed to acquire Broadcom for $37 billion. In March, the Dutch chipmaker NXP Semiconductors agreed to acquire Freescale Semiconductor in a deal worth $11.8 billion.
San Jose-based Altera, founded in 1983, is a manufacturer of Programmable Logic Devices (PLDs), reconfigurable complex digital circuits. Its main competitor is Xilinx, Inc.
Shares of the two companies climbed up Friday on reports of a potential takeover.
Altera shares gained 4% Friday, closing at $48.85, while Intel gained 1.3%, closing at $34.36.
Video – What is takeover?
This article explains what (acquisitions (takeovers) are, and why they are not the same as mergers.