Apollo Global Management has offered to make a multibillion-dollar investment in Intel, according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker’s turnaround strategy.
The alternative asset manager has indicated in recent days it would be willing to make an equity-like investment of as much as $5 billion in Intel, said one of the people, who asked not to be identified discussing confidential information. Intel executives have been weighing Apollo’s proposal, the people said. The size of Apollo’s potential investment could change or discussions could fall apart, they said.
The development comes after San Diego-based Qualcomm floated a friendly takeover of Intel, people with knowledge of the matter said on Saturday, raising the prospect of one of the biggest ever M&A deals. Neither deal has been finalised.
Representatives for Apollo and Intel declined to comment.
The potential investment may have a big impact at Intel’s Irish base in Leixlip, where it employs most of its 5,000 staff in Ireland. The company is expected imminently to make known how many jobs are set to go at its Irish operation as part of its global cost-cutting programme. Intel has already confirmed it will close a research and development facility in Shannon. While that move won’t result in additional job losses at the Irish business, it is indicative of the scale of retrenchment at Intel’s operations here.
Intel and Apollo already have a relationship. Santa Clara, California-based Intel agreed in June to sell a stake in a joint venture that controls a plant in Ireland for $11 billion to Apollo, bringing in more external funding for a large expansion of its factory network.
[ Chipmaker Qualcomm floats friendly takeover plan for IntelOpens in new window ]
[ Intel's Irish staff consider redundancy and early retirement offerOpens in new window ]
[ Apollo takes 49% stake in Leixlip joint venture with Intel Opens in new window ]
Under chief executive Pat Gelsinger, Intel has been working on an expensive plan to remake itself and bring in new products, technology and outside customers. Still, the company is headed for its third consecutive year of shrinking sales, and its shares have lost more than 50 per cent of their value this year. While Apollo may best be known today for its insurance, buyout and credit strategies, the firm started out in the 1990s as a distressed-investing specialist.
Intel’s shares rose about 3 per cent in New York on Monday. The stock had closed 3.3 per cent higher at $21.84 on Friday, giving the company a market value of $93.4 billion.
The company’s shares bounced last week after Mr Gelsinger made a series of announcements to accelerate the turnaround. Those included a multibillion-dollar deal with Amazon’s Amazon Web Services cloud unit to co-invest in a custom AI semiconductor and a plan to turn its ailing manufacturing business into a wholly-owned subsidiary. Intel also said it would pull back on some projects, including shelving plans for new factories in Germany and Poland for now.
Apollo also has other experience in the chipmaking space. Last year the New York-based firm agreed to lead a $900 million investment in Western Digital, buying convertible preferred stock. – Bloomberg
