Discussions over a takeover by Intel Corp (NASDAQ:INTC) of smaller chip maker Altera Corp (NASDAQ:ALTR) have ended as the companies were unable to agree on price, a person familiar with the matter said, but Altera shares rose, suggesting it is still a potential target.
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Altera's shares surged 4 percent at $43.75 in afternoon trading on Nasdaq after earlier falling as much as 8 percent. Intel shares were up slightly at $31.44 after falling earlier in the day.
Intel's offer was in the neighborhood of the low-$50 per share range, CNBC reported earlier on Thursday. (http://cnb.cx/1Do4pl4) That represents a premium of almost 50 percent to Altera's price before news of the talks was first reported on March 27.
Intel declined comment. Altera did not immediately respond to requests for comment.
"If, in fact, (Altera) management did turn down a $50+ offer, investors will want to know what kind of plans management has to achieve a $50+ stock price in the next number of years," said RBC Capital Markets analyst Doug Freedman, in a note to clients.
Late last month, Intel was reported to be in talks to buy Altera in a deal that could have topped $10 billion.
Altera had a market capitalization of $12.6 billion as of Wednesday. Its shares had surged more than 20 percent since merger talks were first reported by the Wall Street Journal.
Had the deal gone through, the takeover would have been Intel's largest acquisition, topping its $7.7 billion purchase of security software maker McAfee in 2011.
Altera would appeal to Intel for its line of programmable chips, increasingly used in data centers and customized for functions such as providing web-search results or updating social networks.
Deals in the chip sector have been expected after NXP Semiconductors' $12 billion purchase of Freescale Semiconductor was announced last month.
Worldwide semiconductor mergers and acquisitions were worth $31 billion last year, the most since 2011, Thomson Reuters data shows. In the 12 months through March 2, 472 chip M&A deals were made worldwide, up from 383 in the previous year.
Market analysts said they expect the chip M&A boom to continue despite the end of the Altera-Intel talks.
"Perhaps it impacts those two stocks but I don't see it offsetting the major trend, which is certainly for more deals," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC.
(By Greg Roumeliotis; Additional reporting by Dan Burns, Sagarika Jaisinghani and Rodrigo Campos; Editing by Chizu Nomiyama, Meredith Mazzilli and Saumyadeb Chakrabarty)