Intel announced in July that it would purchase outstanding shares of the San Jose graphics chip maker for $17.50 a share. But following a subsequent Federal Trade Commission investigation into the deal, Intel was forced to extend the offer to November 21.
"We don't have approval from the FTC. That's what's holding it up," said Intel spokesman Chuck Mulloy. "We continue to be optimistic that we'll get it."
Under federal law, acquisitions over $15 million are subject to regulatory approval. The government can stop any deal it believes will crush competition in a given market. Given the fact that Intel controls 90 percent of the market for microprocessors in personal computers, combined with the fact that C&T is one of the leading manufacturers of graphics chips for notebook PCs, analysts believe the FTC is giving the deal extra scrutiny.
In addition to its inquiry into the acquisition, the FTC is believed to be probing other Intel business practices. A spokeswoman for the FTC, however, declined to comment on the matter.
Analysts say the investigation into the C&T acquisition probably indicates more smoke than fire. "Most analysts on the street don't expect the deal to be curtailed," said Rich Peterson, an analyst at Securities Data in New Jersey. "This is probably more of a paper hurdle than a roadblock."
Megan Graham-Hackett, an analyst at Standard & Poor's, agreed. "I think at the end of the day [the FTC] will say it's a natural extension of what Intel wants to do and isn't necessarily anticompetitive."
In addition to extending the tender offer, both Intel and C&T agreed to extend to January 31 the so-called drop-dead date by which either may unilaterally terminate the transaction if the tender offer has not yet been consummated.
As of November 12, more than 14 million shares of C&T stock had been tendered in the offer, Intel said, comprising 64 percent of outstanding offers.