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Intel mulls possible takeover bid for Broadcom

Intel mulls possible takeover bid for Broadcom

A Wall Street Journal report last Friday cited the usual anonymous people with knowledge of the deal as having heard Intel has discussed it might need to take the role of apex predator rather than let Broadcom swallow Qualcomm.

The Journal reported that Intel had been considering a Broadcom bid since late past year and was working with advisers, although the newspaper said one of its sources described a bid as unlikely given the complexity of the combination. One source told the Journal that it would be unlikely. The WSJ also reports that Intel could be looking at other options as well such as smaller acquisitions to remain competitive.

Singapore-based Broadcom's US$117 billion bid for Qualcomm faces concerns by U.S. regulators anxious about potential Chinese influence on the company and United States ability to influence the creation of the next generation of mobile networks, called 5G. There is real doubt cast on any deal at any price because the USA government is going to scrutinize the deal over potential national security issues due to foreign investment. In that meeting, shareholders will also vote for Broadcom's slate of six nominees for Qualcomm's 11-member board. Early indications showed that Qualcomm was on course to lose majority control of its board to Broadcom, according to information obtained by Bloomberg.

Broadcom said US 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. Vetr upgraded Broadcom from a "hold" rating to a "buy" rating and set a $291.95 price target for the company in a research note on Monday, November 13th. At least, that would be the case if the deal exists: Intel, naturally, has refused to comment on what it describes as rumours and speculation, while both Qualcomm and Broadcom have been silent on the matter.




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. That followed the similarly sized purchase of programmable chipmaker Altera Corp.in 2015. 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".

A combined Broadcom and Intel would leave customers such as Apple Inc. purchasing more components from a single source.

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