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Is Xilinx set to jump on the M&A bandwagon?

Posted: 25 Jan 2016 ?? ?Print Version ?Bookmark and Share

Keywords:Xilinx? Intel? FPGA? Qualcomm? acquisition?

Xilinx has recently made a filing with the U.S. Securities and Exchange Commission revising its agreements with CEO Moshe Gavrielov and four other senior executives to offer them with more benefits in the event of change of ownership of the company, igniting rumours that the FPGA company is preparing to be acquired.

Last week, financial news trade publication DealReporter stoked speculation that Xilinx would be acquired by chip vendor Qualcomm. The two companies have been collaborating closely in recent times, announcing last year a deal to work together on heterogeneous computing technology.

Christopher Rolland, an analyst at FBR Capital, wrote in a report Wednesday that the SEC filing by Xilinx increases the chances that Xilinx will be acquired. The filing is similar to one made by Altera about six months before Intel initially offered to acquire the company, Rolland said. He added that the filing perhaps lends credence to the DealReporter story.

In a conference call with analysts following Xilinx' quarterly earnings report Wednesday, Gavrielov described the filing as a mere formality to bring Xilinx in line with other companies in the semiconductor industry and beyond.

"What we are doing is basically aligning the change in control arrangement for the company's executive management to be in line with those which are common for public companies both in our industry and actually across industries," Gavrielov said.

He said the filing was made after a recommendation to the board of directors from an external consultant.

"There is clearly massive consolidation which is happening in the semiconductor world and the general expectation is that will continue," Gavrielov added. "Having said that, we really don't comment on market speculation or rumours and there have been numerous ones."

A takeover of Xilinx by Qualcomm would be notable against the backdrop of massive consolidation which is taking place in the semiconductor industry. Last year, total value of semiconductor industry acquisitions announced topped $105 billion, more than eight times the average annual value of acquisitions by semiconductor companies over the previous five years, according to IC Insights Inc.

Altera, Xilinx's smaller rival in the programmable logic space, was swallowed by Intel in a $16.7 billion deal that closed late last year. Intel has said it expects the acquisition to lead to the creation of processors that incorporate FPGA technology that will be used in the data centre and Internet of Things (IoT) market segments.

"It makes sense that Qualcomm might be looking to match Intel's purchase of Altera," said Rob Lineback, senior market research analyst at IC Insights.

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