While Apollo Global Management’s (APO) move to land Paramount (PARA) may not have panned out, new reports suggest it may have a new target in mind: chip maker Intel (INTC). The chip maker’s balance sheet is hurting, and Apollo may be able to have a solution. The news was welcomed by shareholders who sent Intel 3.5% higher in Monday trading.
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Reports noted that Apollo is considering a “multi-billion dollar investment” in Intel, which may actually be just what it needs. A confidential report out of Apollo, meanwhile, pinned the amount in the $5 billion range, for an “equity-like investment.” The former semiconductor leader is also subject to a takeover offer rumor from Qualcomm (QCOM).
The reports also note that Intel is considering the Apollo offer, which may ultimately change as both sides conduct further evaluations and potential discussions. Interestingly, Intel already has a connection to Apollo; Apollo previously bought a reportedly $11 billion stake in an Intel joint venture which saw a new chip plant built in Ireland.
Qualcomm – Intel Merger Doubts
Meanwhile, a growing number of pundits believe that the Qualcomm – Intel merger is not likely to happen anyway. One major reason is that the regulatory environment has been downright punishing for mergers of late. That concern might be enough to scuttle a Qualcomm – Intel deal before it even got out of the gate.
Further, Intel is not exactly in the best place for a merger right now. It has been laying off employees at a fever pitch and working to build out, and spin off, its foundry operations. That does not leave it in a good position for someone else to come in and take over. Then there is the matter of Intel’s position in artificial intelligence (AI) chipmaking. While this is a potentially valuable new market, Qualcomm’s ability to give Intel a boost in that market is unclear at best.
Is Intel a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on INTC stock based on one Buy, 26 Holds and seven Sells assigned in the past three months, as indicated by the graphic below. After a 32.86% loss in its share price over the past year, the average INTC price target of $25.47 per share implies 12.85% upside potential.
