Xilinx jumps 5.9% amid $15B takeover rumor

• 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.

Comments

[Mikie713]

Was $XLNX targeted by SoftBank?

[rt94103]

SoftBank isn't done yet. Nor are countless others with giant cash hordes.

[GrayhawkAZ]

Just seems to be a lot of rumors and no action for well over a year now... What is different now?

[rt94103]

Crickets...

[twiggystock]

Deep void of space quiet. Calm before storm?

[rt94103]

Let's hope so. Looked like is was starting a breakout right before the Brexit. Seems pretty solid.

[twiggystock]

I wonder if they can announce a merger during running up to earnings or on earnings day? Does that ever happen?

[twiggystock]

might be Google. they are hiring FPGA engineers. much easier than building it all out from scratch.

[Mikie713]

If it's Google, I can see $XLNX hitting $70 within 18 hours of the announcement.

[Abbas1965]

let's hope the bidding war starts soon. have in the money call options.

[Tt78]

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.

[Abbas1965]

Sept 47 calls.

[Abbas1965]

if you have till September, might as well wait since there is already talk of them wanting to be acquired.

[Abbas1965]

why hasn't xlnx commented on this rumour?

[rt94103]

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.

[Abbas1965]

thanks for responding.

[Abbas1965]

let's hope the bidding war starts soon. have in the money calls on xlnx.

[rt94103]

Bought after earnings on 4/27 based on this being rumored. Looks like nice upside from here.

[Steve Rasher]

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]

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.

[investor5115]

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.