Intel sells majority stake in Altera as company shifts its focus
Intel is selling Altera to sharpen its focus on its core products
Intel has announced that it has entered a “definitive agreement” to sell a 51% stake in Altera to Silver Lake, a private equity group. This sale values Altera at $8.75 billion. That means that Intel will receive $4.375 billion through this transaction.
Throughout his move, Intel will become a minority (49%) stakeholder in Altera. This grants Altera operational independence as a pure-play FPGA provider while giving Intel the ability to “participate in Altera’s future.”
This sale is part of CEO Lip-Bu Tan‘s plan to refocus Intel on its core product offerings. Once this sale has been completed, Intel will no longer need to consider the FPGA market. This will allow Intel to focus more on CPUs, GPUs, and other core product lines. Lip-Bu Tan wants a slimmer, more focused Intel, and ditching Altera achieves that. Whether or not this is the last part of Intel to be sold remains to be seen.
With their announcement, Intel has confirmed that Sandra Rivera will become Altera’s new CEO. This change will come into force on May 5th.
Today’s announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet.
Altera continues to make progress repositioning its product portfolio to participate in the fastest-growing and most profitable segments of the FPGA market. We are grateful for Sandra’s strong leadership and lasting impact throughout her 25-year Intel career and wish her continued success as she begins a new chapter. Raghib is a superb executive we selected to lead the business forward based on his vast industry experience and proven track record of success. We look forward to partnering with Silver Lake upon closing of the transaction, as their industry expertise will help to accelerate Altera’s efforts and unlock additional economic value for Intel.
Altera was independent before, and will be again
Altera has been in the FPGA market for over 40 years. Founded in 1983, it was acquired by Intel in 2015. Once Intel’s transaction with Silver Lake closes in the second half of this year, Altera will be independent once again. Note that Altera is a profitable part of Intel’s portfolio. Regardless, Intel sees this sale as a good thing, as it will improve the company’s balance sheet and provide some much-needed cash for the company. If Lip-Bu Tan’s comments are believed, big changes are coming to Intel.
Overall, this sale is a good thing for Intel. Obviously, adding $4.35-ish billion to Intel’s balance sheet is a good thing. However, it remains to be seen if this sale will be good for both Altera and Intel long-term.
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