Published: Mon, March 12, 2018
Money | By Armando Alvarado

Intel, Facing Threat, Considers Deals That Could Include Bid for Broadcom

Intel, Facing Threat, Considers Deals That Could Include Bid for Broadcom

Intel is considering a number of acquisition options, including a bid for Broadcom, according to a report by The Wall Street Journal reported Friday.

If Broadcom were to acquire Qualcomm for its current bid - which neglects Qualcomm's ongoing buyout of NXP Semiconductors for more than $40 billion - the combined company would have a valuation near $220 billion, third to TSMC at approximately $222 billion and Intel at $245 billion.

Intel, responding to the rumours, said it does not comment on "rumours or speculation" related to mergers and acquisitions. Sources indicated that there's no guarantee an Intel offer would happen, and one said it was unlikely.

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.

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Last week, the U.S. Treasury's Committee on Foreign Investment in the United States, CFIUS, released a letter saying it was reviewing the transaction for national security risks, putting the deal temporarily on hold. In response, Broadcom is attempting to replace some of Qualcomm's board, allowing the purchase to be finalized. Early indications showed that Qualcomm was on course to lose majority control of its board to Broadcom, according to information obtained by Bloomberg. However, at the request of CFIUS, the proxy vote by Qualcomm stockholders was pushed to April 5. Broadcom is pressing ahead, vowing to cooperate with the US review and pledging to boost investment in USA wireless technology to offset concerns that it would slash spending and allow foreign companies to steal the lead in the next generation of mobile technology.

Intel has insinuated that its primary focus at the moment is to focus on integration of its recent acquisitions and be able to make a profitable turnaround for the benefit of its customers and its shareholders. Broadcom has a diverse line of equipment for networking and communications, so it would help Intel become more diverse and a bigger threat to Qualcomm. Vetr lowered Broadcom from a "strong-buy" rating to a "buy" rating and set a $295.36 price objective for the a research note on Wednesday, January 3rd. Intel could use the transaction to gain a beachhead in wireless handsets - an area it has so far struggled to penetrate.

"In short, US national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation", the company said.

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