Intel Corporation (NASDAQ: INTC) has made what many will consider a strange move by acquiring Wind River Systems Inc. (NASDAQ: WIND). But there is more to this than meets the eye and it will give Intel higher sales with high margins.
The processing giant will acquire Wind River in an all-cash buyout valued at $11.50 per share. This comes to $884 million. There is already some hope here for a higher purchase price.
Embedded systems and mobile devices are essentially new growth avenues for Intel, even if you include a recent announcement of a memorandum of understanding between Intel and Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) for systems on a chip.
Wind River's board of directors has unanimously approved the transaction, but the stock has traded at a small premium to the $11.50 price tag. Some may be hoping for a competing bid. Intel is the perfect buyer, but there are several other technology leaders who could potentially make a play for Wind River.
If you think this buyout is from left field, it is not. Jim Cramer touted Wind River as a buyout candidate over a year ago. With this one trading at $11.54 -- above the acquisition price -- and with a 52-week range of $5.61 to $12.99 there is little surprise that some might be expecting a higher price.
Jon C. Ogg is a partner and editor for 24/7 Wall Street. He does not hold shares of stock in the companies he covers.
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