The potential “deal of the century”, in which Qualcomm would buy Intel entirely, is too important an informational occasion not to return to it several times. Bloomberg through its channels obtained new details of the likely deal, emphasizing that the takeover will be friendly and will not cause concern to American regulators, but Qualcomm then intends to sell off part of Intel’s assets.
Image Source: Intel
As the source notes, Qualcomm approached Intel with a proposal for a friendly takeover a few days ago. The main scenario involved buying the entire Intel company, but given the option, Qualcomm is not opposed to buying individual Intel assets or selling them after the deal. Qualcomm representatives reportedly consulted with American regulators and are convinced that a deal between two American companies would not cause serious concern to the authorities.
The most interesting thing is that Bloomberg’s sources managed to find out how Intel CEO Patrick Gelsinger, who almost four years ago began a serious restructuring of the processor giant’s business, views such a deal. On the one hand, Gelsinger is confident in Intel’s ability to overcome the crisis, relying on the plan he proposed to the board of directors, while remaining an independent company. On the other hand, as noted, Gelsinger is ready to consider alternatives if they bring real benefits to the company. Both companies consult with various consultants on these issues.
Over the past 12 months, Intel’s stock price has decreased by 37%, reducing the company’s capitalization to $93 billion. During this time, Qualcomm shares have risen in price by more than 50% and increased the capitalization of this company to $188 billion. If the companies agree to merge, it will be one of largest transactions in the history of the stock market. Intel’s revenue for the current year will not exceed $52 billion, as forecasts say, and this is only 70% of its revenue in 2021.
The dynamics of Intel’s stock price this week were influenced by new details about the plan to overcome the crisis. The company is going to further isolate its production division in order not only to attract customers for the contract production of chips from among its competitors, but also to open up the possibility of attracting third-party investment in this business. A long-term deal was announced with Amazon’s cloud division, which involves the production of components at Intel facilities using advanced 18A technology. In addition, Intel has optimized its organizational structure, focusing resources on two areas related to the development and release of components for the PC and server segments, respectively. The Altera subsidiary will not be sold entirely, as was believed; Intel will continue to prepare it for an IPO. Parent Intel will also not sell its subsidiary Mobileye completely, but it has already entered the American stock market. Intel will postpone the construction of enterprises in Germany and Poland for two years, and the constructed enterprise in Malaysia will not rush to put it into operation.