Pat Gelsinger, CEO, Intel Corporation, testifies during the Senate Commerce, Science, and Transportation hearing on semiconductors entitled Developing Next Generation Technology for Innovation, in the Russell Senate Office Building, Wednesday, March 23, 2022.
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Intel looking to sell at least a minority stake in the Altera subsidiary that will raise several billion dollars in cash for the struggling firm, according to people familiar with the matter. This move represents a sharp departure from previous public messaging about the company’s larger prospects.
The storied semiconductor company has made overtures to several private equity and strategic investors this week, said the person, who requested anonymity to speak freely about confidential information. Intel has written to several investors that it will be possible to acquire a majority stake in the Altera business, which was valued at $ 16.7 billion when Intel acquired it in 2015, said one of the people.
Intel is looking for a deal that values Altera at around $17 billion, the person said.
A representative for Intel did not immediately respond to CNBC’s request for comment. The sale process represents an abrupt about-face from Intel’s previous comments about Altera, when as recently as September the CEO said that Intel leaders viewed the business as a core part of Intel’s future.
Intel has previously said that it can look to monetize Altera’s business through an initial public offering, possibly as soon as 2026. But the idea of taking strategic or private equity investment will be accelerated marked by plans.
CEO Pat Gelsinger and his leadership team previously said Intel was aware of its weak position and was working aggressively to address it. Of course, selling a minority stake in Altera will allow Intel to more easily pursue its semiconductor fabrication ambitions and reassure investors that it has a strong path forward as an independent company.
But the sale also comes as Qualcomm has expressed interest in acquiring its rival, a deal that will face intense regulatory scrutiny and shape the semiconductor industry. Intel has to grapple with a significant debt load, and has seen its stock plunge more than 50% year-to-date.
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