Intel considers possible bid for Broadcom

Intel considers possible bid for Broadcom

The Wall Street Journal on Friday reported that Intel was considering such a bid as one of several options in response to Broadcom's hostile bid for Qualcomm Inc.

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. Broadcom's now market value stands at around $104 billion.

In response to an inquiry about the Journal's report, Intel said it does not comment on "rumours or speculation" related to mergers and acquisitions but that it is focused on its previous acquisitions.

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.

Separately, Qualcomm said it discontinued the role of executive chairman and named a new non-executive chairman as it seeks to curry favour with shareholders ahead of a proxy fight with Broadcom, now slated for 5 April.

Broadcom said USA national security concerns are not a risk to the closure of the proposed buyout as it never planned to acquire the company before it completes redomiciliation.

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Yet in reality, Intel, who is favored to gain contracts from Apple for modems for next generation devices over Qualcomm, could lose that business to Broadcom should their bid be allowed to proceed.

Shareholder meetings for both companies were scheduled for earlier this week, which might have led to a resolution, since Broadcom is attempting to oust Qualcomm's board and replace directors with its own nominees. Broadcom is pressing ahead, vowing to cooperate with the USA review and pledging to boost investment in US 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. A successful deal would create a much larger competitor for Intel. Oppenheimer restated a "buy" rating and set a $300.00 target price (up from $275.00) on shares of Broadcom in a research note on Monday, December 4th. Intel acquired autonomous vehicle technology firm Mobileye past year and acquired programmable chip maker Altera in late 2015.

Broadcom is a leader in the chips that control Bluetooth connectivity and link mobile phones and other devices to Wi-Fi networks.

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

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