Wall Street: Intel-Altera Deal Not Over 'Til It's Over
The market gave some support to that view, with Altera opening sharply lower on the news Thursday, but then gaining as much as 12 percent in intraday trading.
Altera changed hands recently at $43.73, up $0.40.
"This isn't over," according to Raymond James' Hans Mosesmann, who said Intel, which has struggled as the personal computer market lags, may have leaked the unconfirmed news early Thursday to CNBC TV in a bargaining ploy.
Several analysts said $54 a share for Altera, which makes field-programmable chips that are more versatile than Intel's standard product, would amount to a handsome offer.
Unconfirmed merger talks were first reported March 27 by the Wall Street Journal.
There may be "considerable pressure on Altera's board to resume talks," Morgan Stanley's Joseph Moore said.
Altera would be hard-pressed to attain a share price in the low 50s in the absence of a premium offered by a merger deal, according to Moore.
It's unclear whether talks will resume, according to unnamed sources cited by the New York Times Thursday.
Altera is "throwing away the golden ticket," according to Citi's Christopher Danely, who said the company has "a long history of over-estimating its growth potential" and has thus miscalculated in rejecting the offer.
Danely said the average premium paid in 11 merger deals dating back to 2011 is 38 percent, versus the 56 percent reportedly offered by Intel.
Altera could revisit the talks, according to Danely, who called the reported $54 a-share offer "certainly well above what Altera is worth."
"The rationale for a deal still exists," Summit Research's Srini Sundararajan said.
Absent a deal, Intel could seek to broaden its product line through a partnership with Altera.
"But a buyout is better than a partnership," Sundararajan said.
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