Intel — once the world’s largest chipmaker — could soon face a friendly takeover bid from Qualcomm, which has reportedly entered talks to buy the company, citing people familiar with the matter. The development comes just as the troubled company this week announced a series of changes aimed at getting its business back on track.
Qualcomm has approached its rivals in recent days to discuss a possible acquisition, according to The Wall Street Journal. But the talks are still in the early stages, and it’s unclear whether the initial contacts will lead to a deal. However, a deal of this magnitude — even if both parties are willing — could be subject to antitrust scrutiny.
The news sent Intel shares up 8 percent in New York trading on Friday, while San Diego-based Qualcomm’s shares fell 5.5 percent.
Intel is currently facing its toughest period in about five decades — its stock price has fallen about 37% over the past 12 months. The company’s sales will shrink for the third consecutive year, and revenue is expected to reach $52 billion in 2024 — just 70% of its 2021 revenue. However, a person familiar with the matter told Bloomberg that CEO Pat Gelsinger still believes the turnaround plan will be enough to keep the company independent.
Currently, the company’s market value is estimated to be around $93 billion. Meanwhile, Qualcomm’s stock price has risen by more than 50% over the same period, with a market value of around $188 billion. Despite recent turbulence, the acquisition would be the largest deal ever in the semiconductor market and has the potential to transform the entire industry.
Bloomberg reported on Saturday that the current proposal is for the entire company. However, Qualcomm has not ruled out the possibility of acquiring or selling a portion of Intel’s shares. Another person familiar with the matter told the newspaper that Qualcomm has been communicating with US regulators and believes that a full US merger can ease any concerns.
However, earlier this month, a report from Reuters stated that Qualcomm executives were reviewing the entire business handled by Intel. The company had reportedly explored the possibility of acquiring some of Intel’s design business, especially its PC design division. CEO Cristiano Amon was said to be personally involved in the negotiations.
However, it’s unclear how Qualcomm would finance the deal. Recent filings show the company (market cap $188 billion) has about $13 billion in cash. Intel, on the other hand, has a market cap of $122 billion and several billion in net long-term debt.
(Based on opinions of various institutions)
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