A private equity firm sees opportunity in Intel.
Just one working day after The Wall Street Journal reported that Qualcomm was interested in buying Intel (INTC 3.30%), today there’s news of another interested party willing to shell out billions for a piece of the chipmaker.
According to a report in Bloomberg, Apollo Global Management, one of the world’s biggest private equity firms, has offered to take a multibillion-dollar stake in Intel.
Intel shares were up 3.4% on the news as of 12:44 p.m. ET.
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Intel gains another suitor
According to Bloomberg, Apollo Global is willing to invest as much as $5 billion into Intel, though the ongoing discussions are confidential.
It’s unclear if such an investment will go through, but it’s the latest piece of evidence that Intel’s low price and turnaround potential are looking attractive to multiple buyers and investors.
Today’s gains may have also been spurred by the news Friday that Qualcomm had approached Intel about a possible acquisition, which came out shortly before the market closed. A tie-up between the two tech giants would likely face significant regulatory scrutiny.
Is Intel too cheap to ignore?
With Intel’s stock in the dumps following a disastrous second-quarter report that included the elimination of its dividend and a massive restructuring, it’s not a complete surprise to see sharks like Qualcomm and Apollo circling the waters.
What’s unclear at this stage is if Intel would entertain a buyout offer or another “strategic option” like a multibillion-dollar partnership with a PE firm like Apollo, which could come with a request for board seats.
A plan to try to sell the company would certainly juice the stock, but CEO Pat Gelsinger seems committed to the turnaround, and the business still faces a lot of challenges.
Still, the attention Intel is getting is a good sign for investors. The stock looks cheap based on its potential, but the company has a long history of missed opportunities and disappointing results.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Qualcomm. The Motley Fool recommends Intel and recommends the following options: short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.
