Shares of Intel Corporation (NASDAQ:INTC) dipped 1 percent Monday after the world's biggest chipmaker announced it is buying Altera Corporation (NASDAQ:ALTR) in an all-cash transaction for $16.7 billion or $54 per share. The move will expand Intel’s line-up of higher-margin chips used in data centers.

Following the announcement, Intel shares fell 1.2 percent to $34.05, while shares of Altera jumped 6 percent to $51.77.

Angelo Zino, equity analyst at S&P Capital IQ, raised the firm’s 12-month price target on Altera by $4 to $54. Zino also maintained his Buy recommendation on Intel, with a 12-month price target of $39.

The deal follows months of back and forth between the two Silicon Valley chipmakers. The San Jose, California-based Altera, which has a market capitalization of $15 billion, previously rejected an earlier unsolicited offer of $54 per share from Intel in April, the Wall Street Journal reported.

The Santa Clara, California-based Intel, which has a market value of $163 billion, will couple its manufacturing process with Altera’s field-programmable gate array (FPGA) technology, the companies said Monday. FPGA is an integrated circuit designed to be configured by a customer or a designer after manufacturing.

“Intel’s growth strategy is to expand our core assets into profitable, complementary market segments,” Brian Krzanich, CEO of Intel, said in a statement. “With this acquisition, we will harness the power of Moore’s Law to make the next generation of solutions not just better, but able to do more.”

John Daane, CEO of Altera, agreed. “We believe that as part of Intel we will be able to develop innovative field-programmable gate array (FPGA) technology and system-on-chips for our customers in all market segments," Daane said. 

Intel’s acquisition of Altera marks the third major wave of mergers and acquisitions across the semiconductor space this year. Avago Technologies Ltd. agreed last week to buy Broadcom Corporation for $37 billion in the industry's biggest-ever takeover. Meanwhile, NXP Semiconductors announced in March a $11.8 billion cash and stock takeover of competitor Freescale Semiconductor.

The deal, which is subject to regulatory approvals, is expected to close at the end of 2015, or early 2016.