Intel, Facing Threat, Considers Deals That Could Include Bid for Broadcom -- 3rd Update
March 09 2018 - 6:49PM
Dow Jones News
By Dana Mattioli and Dana Cimilluca
Intel Corp. is considering a range of acquisition alternatives
in reaction to Broadcom Ltd.'s hostile pursuit for Qualcomm Inc.
that could include a bid for Broadcom, according to people familiar
with the matter.
Intel is watching the takeover battle closely and is eager for
Broadcom to fail as the combined company would pose a serious
competitive threat, the people said. If it looks like Broadcom is
likely to prevail, Intel could step in with its offer for Broadcom,
the people said.
Intel has been considering such a move since late last year and
is working with advisers, some of the people said. It is far from
guaranteed that Intel would ultimately make such a move -- one of
the people said it is unlikely -- and the complexity and size of
such a combination would be enormous. Broadcom currently has a
market value of about $104 billion.
It is also possible that Intel ultimately decides to make other,
smaller acquisitions one of the people said.
The news of Intel's review adds a new twist to a takeover drama
that has been unfolding since late last year. Broadcom has waged a
monthslong hostile fight to take over Qualcomm, which would
dramatically reshape the semiconductor industry and have major
ramifications for other players such as Intel.
It would also show the potential a Broadcom-Qualcomm tie-up has
to turn the semiconductor industry upside down.
Intel and Qualcomm are fierce rivals and Intel has been working
to chip away at Qualcomm's strong position in making equipment for
wireless devices, namely those from Apple Inc. Qualcomm and Apple
have been in a bitter dispute and should Broadcom succeed in buying
Qualcomm, it could smooth over relations with Apple, closing a door
to further possible gains from Intel.
It would be Intel's biggest acquisition by far -- and should it
pursue one, there's no guarantee regulators would bless it. Intel,
based in Santa Clara, Calif., and with a market value of nearly
$240 billion, has been acquisitive in recent years as it looks to
diversify away from its core business of powering the
personal-computer industry, which is in decline.
Last year, Intel bought Israeli car-camera pioneer Mobileye NV
for roughly $15.3 billion in a bet on connected cars. In 2015, it
struck its largest deal ever when it bought Altera Corp. for $16.7
billion. Intel hoped that buying Altera would help bolster its
position in server systems and other equipment found in corporate
data centers, the company said at the time, as well as fuel its
plans surrounding the so-called Internet of Things.
In the most recent piece of drama surrounding Broadcom's bid to
buy Qualcomm, the effort was dealt a setback when the Committee on
Foreign Investment in the U.S., or CFIUS, indicated it has concerns
about the takeover and would review it.
That appeared to lengthen the odds that Broadcom and its chief
executive, Hock Tan, would succeed in their pursuit of Qualcomm,
which has rejected the $117 billion offer as too low.
Separately, Qualcomm has in place its own pending $44 billion
deal to buy NXP Semiconductors NV, which it sweetened in February,
a move Broadcom criticized.
Should Broadcom's bid for Qualcomm founder, it is possible Intel
would stand down, happy with the status quo.
Broadcom has been seeking to replace a majority of Qualcomm's
board members to help pave the way for a deal. A vote on the
directors that was slated to take place this past Tuesday at
Qualcomm's annual meeting was pushed back a month at CFIUS's
behest.
Broadcom sells a diverse line of equipment for networking and
communications -- including technology for smartphones from Apple
and Samsung Electronics Co. -- as well as data storage, electronic
displays and set-top boxes. Broadcom is a so-called fabless chip
company, designing processors while relying on manufacturers such
as Taiwan Semiconductor Manufacturing Co. to actually make
them.
Under Mr. Tan, Broadcom has pursued a string of
acquisitions.
The company was formed when Avago Technologies Ltd. in 2015
agreed to buy the former Broadcom for roughly $37 billion and kept
its name. Broadcom's revenue was twice the size of Avago's at the
time of the merger.
Write to Dana Mattioli at dana.mattioli@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
March 09, 2018 18:34 ET (23:34 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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