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Xilinx jumps 5.9% amid $15B takeover rumor

May 24, 2016 3:37 PM ETAdvanced Micro Devices, Inc. (AMD)AMD, QCOM, AVGOBy: Jason Aycock, SA News Editor22 Comments
  • Xilinx (NASDAQ:XLNX) is up 5.9% this afternoon on heavy volume after a StreetInsider report saying the company has drawn a $15B takeover offer, but from a mystery suitor.
  • The company has been considered the only large-cap chipmaker with the attributes of a good target, after Intel's purchase of Altera. Apple suppliers including Qualcomm (NASDAQ:QCOM) or Broadcom (NASDAQ:AVGO) are the most likely suitors for Xilinx.
  • Xilinx used yesterday's analyst day to reiterate guidance for fiscal 2017 (sales growth of 4-8%, opex growth of 7-9%) and prompt strong bullishness from Pacific Crest. Analyst John Vinh sees the firm taking share in field-programmable gate arrays from Intel's Altera, which has faced delays and has "already lost at 20 nm and 14 nm."
  • Xilinx is expecting $750M in incremental revenue over the next five years, a modest 6% in compound annual growth. "Of the $750 million, $500 million is expected to be from market expansion, while $250 million should be from PLD share gains. This would imply ~$3.25 in EPS, which at 20x suggests fair value of $65," Vinh writes.
  • That $65 value would be 37% upside from today's (higher) price; Vinh has a price target of $55 (16% upside).
  • William Blair's Anil Doradla thought the overall tone was good but "lacked conviction" and was light on comment about the company's key wireless/wireline segments. He's maintaining an Outperform rating.

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Comments (22)

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Mikie713 profile picture
Was $XLNX targeted by SoftBank?
rt94103 profile picture
SoftBank isn't done yet. Nor are countless others with giant cash hordes.
GrayhawkAZ profile picture
Just seems to be a lot of rumors and no action for well over a year now... What is different now?
rt94103 profile picture
Deep void of space quiet. Calm before storm?
rt94103 profile picture
Let's hope so. Looked like is was starting a breakout right before the Brexit. Seems pretty solid.
I wonder if they can announce a merger during running up to earnings or on earnings day? Does that ever happen?
might be Google. they are hiring FPGA engineers. much easier than building it all out from scratch.
Mikie713 profile picture
If it's Google, I can see $XLNX hitting $70 within 18 hours of the announcement.
let's hope the bidding war starts soon. have in the money call options.
What's your time frame? I purchased 9/16/2016 @ 55 call opts for $0.12 at the end of April, wondering if I should sell them or wait for an announcement.
Sept 47 calls.
if you have till September, might as well wait since there is already talk of them wanting to be acquired.
why hasn't xlnx commented on this rumour?
rt94103 profile picture
They probably have some sort of gag order in the offer. So perhaps XLNX slipped the rumor out to see if they can get a bidding war going.

I too own both XLNX and QCOM, so wouldn't mind if Qualcomm spends some of their cash horde to buy XLNX at over $65 a share.
thanks for responding.
let's hope the bidding war starts soon. have in the money calls on xlnx.
rt94103 profile picture
Bought after earnings on 4/27 based on this being rumored. Looks like nice upside from here.
Steve Rasher profile picture
I own both XLNX and QCOM, so I am hoping the bidder is QCOM as I believe it could open new opportunities. Having said that, given that AVGO has been on a buying binge the last few years, I wouldn't be surprised if it is the secret acquirer. Steve
Mikie713 profile picture
Exactly my position, Steve, own both XLNX and QCOM, and there's a case to be made for either QCOM or AVGO being the suitor. I believe there was a rumor involving AVGO some time back, a year or so ago. Still, just for keeping the portfolio tidy, my hopes rest on QCOM.
Xilinx is a big target as the markets for FPGA widen. It also helps that they are soundly beating their only competition Altera with 2 years lead in process technology node transitions. I wouldn't be surprised if they get bought out at a big premium.
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