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Which Companies Might Be Interested in Xilinx?

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Jan. 25 2016, Updated 11:07 a.m. ET

Xilinx is a potential acquisition target

In the previous part of this series, we saw that Xilinx’s (XLNX) announcement of a change-of-control provision sparked rumors of a potential acquisition of the company. If this rumor materializes, it would be the first major M&A (merger and acquisition) deal of 2016 in the semiconductor industry, which witnessed record high consolidation activity in 2015.

Let’s look at some of the potential suitors for the company.

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Potential acquirers

BMO Capital Markets analyst Ambrish Srivastava names Qualcomm (QCOM) and China’s (FXI) Tsinghua Holdings as potential acquirers of Xilinx. Pacific Crest names Qualcomm and Avago (AVGO).

Qualcomm

According to both equity research firms, Qualcomm is a more likely buyer as it is looking to expand in the data center and IoT (Internet of things) market. It has entered into several joint ventures, and it believes that Xilinx is an ideal acquisition to help it compete with Intel (INTC) in the server space. Qualcomm also has sufficient cash reserves of more than $17 billion to fund a major acquisition.

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Tsinghua Holdings

China’s Tsinghua Holdings is the most active acquirer in the technology space as it looks to tap the semiconductor IP (intellectual property). The company has been aggressively acquiring companies to make China self-sufficient in the semiconductor space. Xilinx, with its strong IP, proves to be a good target.

Avago Technologies

Before acquiring Broadcom, Avago was rumored to be in acquisition talks with Xilinx and other semiconductor companies, according to a Reuters article dated May 14, 2015. The possibility of Avago being a potential buyer is low.

Surprisingly, no analyst mentioned IBM as a potential suitor. In November 2015, IBM partnered with Xilinx to use the latter’s FPGAs (field-programmable gate arrays) to accelerate the former’s Power architecture data center solutions.

In the next part of the series, we will look at Xilinx’s fiscal 3Q16 financial performance.

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