March 21, 2018

Intel is looking to play spoilsport in Broadcom's acquisition for Qualcomm

12 March 2018, 01:52 | Cesar Cruz



Intel is considering a range of acquisition alternatives in reaction to Broadcom's hostile pursuit for Qualcomm.

If Broadcom was successful in its bid to acquire Qualcomm, the combined company would have a valuation of around $220bn, closing in on Intel's $245m, which means the combined company would pose a much bigger threat to Intel in the chip market.

The Journal said that if it looks like Broadcom would win its bid, Intel could make its own bid for Broadcom. One source told the Journal that it would be unlikely.

The announcement that Intel Corporation (NASDAQ:INTC) is making a consideration to buy Broadcom Ltd (NASDAQ:AVGO) which is valued at more than $100 billion has proven the extent to which the giant company feels threatened by the potential merger between Qualcomm and Broadcom.

Broadcom's bid to acquire Qualcomm - which has been rejected multiple times by Qualcomm's board of directors - faces longer odds after its raised concerns among the Committee for Foreign Investment in the United States (CFIUS), a multi-agency USA government panel that reviews potential acquisitions for US national security implications.

If Broadcom can convince US regulators that it should be allowed to purchase Qualcomm, an even bigger fish is standing by possibly ready to gobble up Broadcom. Early indications showed that Qualcomm was on course to lose majority control of its board to Broadcom, according to information obtained by Bloomberg.

Temple set to face Penn State in National Invitation Tournament opening round
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Shares of semiconductor company Broadcom surged following a report on Friday that Intel is considering an acquisition.

While a new vote has been scheduled for April 5, a review by the Committee on Foreign Investment in the US (CFIUS) is expected to take longer.

So in many ways, what Broadcom refers to as its plans to "redomicile" to the USA are largely symbolic. Indeed, the whole snarled mess surrounding the notion of a foreign company buying a prize like Qualcomm goes right to the heart of what one means by an "American" company. Intel could use the transaction to gain a beachhead in wireless handsets - an area it has so far struggled to penetrate.

"It's a game of high-stakes poker in the chip industry, so it makes sense for Intel to be looking at more acquisitions", Daniel Ives, chief strategy officer with market researcher GBH Tech Research, said Friday.

Intel receives just over 5 percent of its sales from Apple, compared with about 7 percent for Broadcom, according to data compiled by Bloomberg.

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