Alternative asset management firm Apollo Global Management has put forth a proposition to pump billions of dollars into chipmaker Intel, seen as a sign of belief in Intel’s revival plan. Recently, Apollo has shown a readiness to potentially make an investment, similar to equity, amounting up to $5 billion (€4.5 billion) into the chipmaker, as stated by a source familiar with the situation, who requested anonymity due to the confidential nature of the information. Intel’s leadership team is in the process of evaluating Apollo’s offer.
However, the details of the investment are not finalised and could alter, with discussions possibly not leading to a deal. This news breaks at the same time as rival chipmaker Qualcomm’s intention of considering a friendly takeover of Intel, which would rank as one of the largest mergers and acquisitions deals ever.
Intel and Apollo both refrained from making a comment on the development. Under CEO Pat Gelsinger’s helm, there is an ongoing costly effort at Intel to reinvent itself by introducing new products, technologies, and third-party clients. Unfortunately, this overhaul has led to declining earnings statements, causing a loss of faith in the initiative and impacting on its market value significantly.
Apollo, although popular for its insurance, buyout, and credit strategies now, started as a distressed-investing expert in the 90s. The firm already has a business relationship with Intel. In June, Intel consented to sell a stake in its Irish plant controlled joint venture to Apollo for $11 billion, facilitating more external financing for a major enlargement of its factory network.
Additionally, Apollo has experience in the chipmaking sector. The company, based in New York, consented to spearhead a $900 million investment into Western Digital in the prior year, acquiring convertible preferred stock.