Xilinx (XLNX) Imminent Takeover Possible, But Not Plausible - Nomura

Nomura Securities analyst Romit Shah weigh in on reports from StreetInsider yesterday that Xilinx (NASDAQ: XLNX) received a $15 billion takeout offer. Shah said whil possible, they believe the probability of a deal this year is low.

Shah notes the speculation comes on the heels of unrestricted insider selling by directors and the retirement of CFO Jon Olson in May.

In addition, during XLNX’s Analyst Day this week, CEO Moshe Gavrielov strongly messaged that Intel's (Altera) PLD share is untenable, driving at least $250m in incremental ($3bn overall) sales by 2020. From the firm's perspective, Mr. Gavrielov didn't appear anxious to sell, especially at discount to Altera ($17bn)

Furthermore, they believe Intel's rationale for buying Altera doesn't carry over to other suppliers. Intel has 95% share in servers and sees Altera’s FPGAs as an enabler of driving higher performance as Moore’s law slows. In contrast, the ARM server ecosystem is nascent. Altera would also provide incremental leverage to Intel’s manufacturing investments, a benefit that fabless ICs such as Qualcomm cannot leverage

The firm maintained a Neutral rating and price target of $41 on XLNX.

For an analyst ratings summary and ratings history on Xilinx click here. For more ratings news on Xilinx click here.

Shares of Xilinx closed at $47.45 yesterday.

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