Intel might receive multi-billion dollar 'equity-like' investment from alternative asset manager Apollo

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Investment would be a vote of confidence in – and fuel for - Intel’s successful turnaround.

Apollo + Intel
(Image credit: Apollo)

Intel has been offered a serious cash injection from Apollo Global Management Inc., reports Bloomberg. According to the business-focused publication, and its people familiar with the matter, Intel could receive a multibillion-dollar equity-like investment from Apollo. Talks are still in the preliminary stage, it is claimed, but could signal that a significant vote of confidence in – and fuel for – Intel’s successful turnaround might be on the way.

At stake here is an investment of up to $5 billion, indicates Bloomberg sources. However, the people who revealed that these negotiations were ongoing, and provided some background details, have asked to remain anonymous. Moreover, Bloomberg’s sources indicate that the size and / or nature of Apollo’s investment could change or the whole deal fall apart. Thus an ounce of skepticism regarding whether we will see this deal close, or not, is due.

An investment for equity approach from Apollo isn’t the greatest surprise, though. As the source report notes, the two firms have an existing business relationship. In June, Intel agreed to sell an $11 billion stake in its Irish factory JV to Apollo, helping fund its massive expansion plans.

Regular readers will be well aware of Intel’s ongoing business troubles. Earlier this month chief executive Pat Gelsinger revealed the company’s next steps to get past this very difficult period, outlining three main goals. A $10 billion saving target was mentioned by Gelsinger, but of course, it would mean some hard decisions regarding staffing, expansion plans, and other streamlining measures.

There is always a chance that pulling back from investments can thwart a potential recovery, so if Apollo invests $5 billion, as rumored, Intel might take its proposed deal. Sadly, we currently don’t have even a hint at what terms Apollo is seeking to go ahead with its equity-like investment. Similarly, we don't know what red lines Intel may have inked into any deal.

Intel / Qualcomm rumors rumble on

The above financial development comes hot on the heels of extraordinary rumors regarding the possibility of Qualcomm’s friendly takeover of Intel. These rumors gained traction over the weekend when heavyweight tech analyst Ming Chi-Kuo confirmed he had also heard about a possible takeover deal.

Mark Tyson
Mark Tyson
News Editor

Mark Tyson is a news editor at Tom's Hardware. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.

15 Comments Comment from the forums
  • Marlin1975
    I do not see this as a good thing.

    Is intel really that hard for cash right now? What do they see internally that makes them think revenue, esp profit, will be dropping so much they need billions to keep the lights on while their "turn-around" is coming to fruition?
    Reply
  • rm12
    So, Intel already sold a 11 billion stake, now 5 additional. What will Intel own in the end own? And much rent could this still generate for Intel?
    Reply
  • Amdlova
    War machine... They will have money from. All sources.
    Reply
  • JRStern
    It depends on the terms.
    "equity-like" generally means a convertible bond or a new preferred class of stock, it's not rocket surgery.
    Or even a new issue of a hundred million new common shares.
    Or some combination thereof.
    Intel's sudden surge in capex around the world was always unsupportable without huge subsidies and probably excessive even with them, if Intel didn't have a care in the world the capex surge was going to be crazy trouble.
    IOW, existing shareholders, watch out, these kinds of things often dilute the value of old shares.
    I'm not really sure Intel needs this, cutting back some of these crazy plans or postponing them by several years may be better, cheaper, and easier.
    Reply
  • acadia11
    Intel is too big to fail. It would be purchased by another player and has far too much IP and assets to not turn around or exists as stalwart for sometime. As to whether Intel needs to the money or not, is irrelevant, they are an unfocused behemoth who was the GMC and Ford of the tech world. With that said they needed streamline and focus and start cutting their teeth on the new world we all live in. And this seems to be the direction they are headed now while they still dominant the desktop and laptop market these markets are shrinking ... so the question is how do they expand in the right new territories. I think they have it right with their foundry ideas as TSMC and Samsung can not handle all of the demand of our hyper-connected, cyber trope, that is and will be and the shaping of silicon required to make it so.
    Reply
  • TheSecondPower
    AMD in the past sold its office buildings to investors and started leasing the same buildings. Was it the best investment for AMD? Essentially it was the opposite of an investment and is costing AMD today. But on the other hand, it gave AMD the last little bit of cash needed to keep the lights on until Zen launched, and Zen was a very successful investment and its derivatives are AMD's bread and butter today.

    Somehow I don't think Qualcomm could buy Intel design and keep the x86 license. But Qualcomm was mentioned as an Intel Foundry Services customer a while back and I'm sure Qualcomm would love to have a stake in the foundries it uses. And for regulatory approval, two US companies sharing IFS is no worse than one owning it.
    Reply
  • ezst036
    Is Apollo one of those "vulture" investment firms?
    Reply
  • NinoPino
    Is it possible that behind Apollo there is the US government trying to save Intel using pubblic money ?
    Reply
  • helper800
    NinoPino said:
    Is it possible that behind Apollo there is the US government trying to save Intel using pubblic money ?
    No.
    Reply
  • Eximo
    TheSecondPower said:
    AMD in the past sold its office buildings to investors and started leasing the same buildings. Was it the best investment for AMD? Essentially it was the opposite of an investment and is costing AMD today.

    Extremely common amongst large corporations. You sell the assets to a holding company or even outright sell and lease the facilities from the new owner. If you decide to close or move a location, you no longer have to sell it. Finding a new tenant no longer your problem. Also common to do this with furniture and other business necessities. Lease your generators, fridges, microwaves, coffee machines (or get a vendor in), phone and network equipment. Own nothing so that closing or opening a location is as easy as ending your contracts. On going cost, but more flexible.

    Also the nepotistic side of it. Get some investors, offer to buy out a companies' assets and do a long term lease agreement. These kinds of deals often originate from the inside of a company for kickbacks. Though I have also seen the opposite happen. A large corporation that owns old facilities renting them out or doing co-ops with suppliers.
    Reply