NEW YORK (TheStreet) -- Altera (ALTR) shot higher Monday after Intel (INTC) announced its largest acquisition ever in snapping up its rival chipmaker for $16.7 billion. GoPro (GPRO) spiked after it debuted a new entry-level video camera. Microsoft (MSFT) climbed after issuing a launch date for its next operating system Windows 10. Cisco Systems (CSCO) fell as investors digested its announcement that its executive suite is changing.
Altera spiked 5.8% to end the day at $51.68. Intel, meanwhile, dropped 1.6% to close at $33.90, on a day when the broader markets advanced.
Under the deal, Intel is purchasing Altera for $54 a share -- a 10.5% premium over its close on Friday, according to a Reuters report. That translates into nine times Altera's forward looking revenue, which, according to a Stifel, Nicolaus & Co. analyst quoted in Reuters, is a very high price to pay. The analyst told Reuters, "The last one I remember that was close was Broadcom (BRCM) buying NetLogic at eight times forward revenue and that didn't turn out very well for Broadcom."
The Altera purchase aims to help the combined company develop chips for the data center market, which is booming as customers demand more storage for information, images and video. The companies also noted it will help them increase its presence in the growing market that is deemed the Internet of Things, in which various devices are all connected and work together through the Internet.