Intel considering options in response to Broadcom's effort to acquire Qualcomm

Intel considering options in response to Broadcom's effort to acquire Qualcomm

Alarmed by Broadcom's quest to engineer a hostile takeover of Qualcomm, Intel has begun to scout for an array of alternative acquisitions, according to a report in the Wall Street Journal.

Intel is watching the takeover battle closely and is eager for Broadcom to fail as the combined company would pose a serious competitive threat, the report said. An Intel deal would be significantly bigger, since its market capitalization alone is almost US$240 billion. It apparently has been considering the move since late a year ago, after Broadcom announced its Qualcomm bid in November.

The WSJ notes that Intel is concerned that the acquisition, if successful, would create a powerhouse in both smartphones and data centres, two areas where Intel hopes to grow.

Intel was not immediately available for comment on the Wall Street Journal report.

Intel has been considering such a move since late past year and is working with advisers, it added. The purchase has been on the discussion table for Intel since a year ago, and according to the Journal, Intel is working with advisers to see if the purchase makes sense.

Regulators in the US would undoubtedly ask for industry input before approving a Broadcom and Qualcomm deal, and word is that many in the tech world are against a deal. However, a few weeks later talks got more argumentative, when Broadcom reduced its buyout offer for Qualcomm to approximately $117 billion, making "an inadequate offer even worse".

The report further noted that "The U.S. Treasury's Committee on Foreign Investment in the United States has raised concerns about Broadcom's pursuit, which is unprecedented for a deal that hasn't been formally announced or agreed to".

On the other hand, acquiring Broadcom - a market leader in wireless and Bluetooth mobile chips - could give Intel a second chance at success in the mobile market. This week, the U.S. Treasury Department ordered a 30-day postponement to Qualcomm's shareholder meeting, which was supposed to hold a vote on a slate of Broadcom board nominees.

Credit Suisse Group reissued a "buy" rating on shares of Broadcom in a report on Tuesday, January 23rd.

Intel has acquired a handful of companies over the past few years like chip maker Altera for $16.7 billion and automotive component and sensor provider Mobileye for roughly $15 billion, but a possible acquisition of Broadcom would dwarf those deals.

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