Silver Lake to Buy Majority Stake in Altera, Intel Stock Up 16%

Bloomberg reports that Silver Lake Management is in exclusive negotiations to acquire a majority stake in Intel's programmable chip (FPGA) division, Altera. Sources familiar with the matter revealed that the private equity firm is exploring the details of this potential investment. Altera's versatile chips are primarily used in telecom networks. Although discussions are reportedly in advanced stages, the exact size of the stake to be acquired remains uncertain, and the deal may still face delays or fail to materialize.

Last November, it was reported that Silver Lake, Bain Capital, and other potential investors were preparing to acquire a minority stake in Altera. Additionally, private equity firm Francisco Partners expressed interest in acquiring part of Altera's shares. Intel has indicated its desire for Altera's valuation to align with its 2015 acquisition price of $17 billion. However, some potential buyers have valued the company at just $9 billion.

Both Intel and Silver Lake declined to comment on the ongoing negotiations.

On February 18, the news led to a 16.06% surge in Intel's stock price, marking its largest intraday gain in nearly five years, and pushing the company's market capitalization back to approximately $118.6 billion.

Intel acquired Altera for $16.7 billion in 2015, and since then, the FPGA business has operated under Intel's Programmable Solutions Group (PSG). On October 3, 2023, Intel announced plans to spin off PSG from its Data Center and Artificial Intelligence (DCAI) division, with the goal of making PSG an independent entity and preparing for an IPO within the next two to three years. On February 29, 2024, Intel officially announced the establishment of a separate FPGA division, bringing back the Altera brand name.

In January 2024, Altera officially became an independent entity. The company raised its flag at its headquarters near San Jose, California, symbolizing its separation from Intel. While Intel retains ownership, Altera is planning for an eventual IPO and will focus on expanding its FPGA product line with greater flexibility, while maintaining a strategic partnership with Intel.

Sandra Rivera, Altera's CEO, emphasized in a recent interview that Intel's plans for Altera to complete its IPO by 2026 and divest part of its stake remain unchanged. Rivera highlighted that Altera's focus will be on providing comprehensive FPGA solutions, from cloud to edge. Altera's ultimate goal is to become the leading player in the FPGA industry, with its IPO serving as a key milestone.

As Altera's main competitor, Xilinx, has been acquired by AMD, and other FPGA companies target lower-tier or niche markets, Altera is well-positioned to capitalize on significant market opportunities. Furthermore, with 80% of its sales and over 50% of its demand coming from channel partnerships, Altera is intensifying efforts to expand into additional markets.