Intel said on Monday that it had agreed to acquire the smaller chip maker Altera for $16.7 billion. The deal comes after the two American companies held talks earlier this year. Further discussions had been delayed, however, when Altera rejected an earlier offer by Intel, people briefed on the talks have said.
Under the terms of the transaction, Intel would pay $54 a share in cash for Altera. That represents a premium of about 56 percent to where Altera was trading on March 26 before reports of merger talks emerged.
On Monday morning, shares of Altera were up 6 percent, at $51.81. Intel shares were down nearly 0.5 percent.
By buying Altera, which makes programmable chips that can be adapted for different uses, Intel would expand its product lines beyond standard chips for personal computers and corporate servers.
“Intel’s growth strategy is to expand our core assets into profitable, complementary market segments,” Brian M. Krzanich, chief executive of Intel, said in a statement. “With this acquisition, we will harness the power of Mooreâs Law to make the next generation of solutions not just better, but able to do more.”
The deal would continue a wave of consolidation in the semiconductor sector as chip makers look to increase their scale and product offerings and gain leverage in negotiating with their customers and suppliers.
Last week, Avago Technologies agreed to a $37 billion takeover of Broadcom, whose chips are used in iPhones and other devices.
In March, NXP Semiconductors paid nearly $12 billion for a rival, Freescale Semiconductor, to become a top supplier of chips for use in cars and Internet-enabled devices. Qualcomm and Infineon have also made acquisitions.
Founded in 1983, Altera manufactures chips known as field programmable gate arrays, or F.P.G.A. They are lower in power and performance than standard computer chips, such as those made by Intel, but can be altered after manufacturing to carry out different functions.
That could allow Intel to offer more flexible products, such as computers or servers that combine the power of a standard semiconductor with the more easily configurable F.P.G.A. chips on a single circuit board. Intel could then build a computer server that could update its functions andas a result last longer in data centers.
Intel says it intends to fund the acquisition with cash on hand and debt. The transaction is expected to close in six to nine months.
JPMorgan Chase, Rothschild and the law firms Gibson, Dunn & Crutcher and Weil, Gotshal & Manges are advising Intel. Goldman Sachs and the law firm Wilson Sonsini Goodrich & Rosati are serviving as advisers to Altera.
Altera, based in San Jose, Calif., posted net sales of $1.9 billion in 2014 and employs more than 3,000 people in more than 20 countries.
Founded in 1968, Intel, based in Santa Clara, Calif., is one of the worldâs largest producers of chips used in computers, servers and other devices. The company posted revenue of $55.9 billion in 2014 and employs more than 106,000 people worldwide.
Source: Free News Headlines Intel Agrees to Buy Altera for .7 Billion