According to media reports, the company has rejected a takeover offer for most of its business.
Some investors probably saw Friday’s latest news about Intel (INTC -0.04%) and thought it was a missed opportunity. According to media reports, the company has rejected a takeover offer for one of its less popular business units. As a result, the chipmaker’s shares traded sideways in an murky market. In the end, it ended the day flat, trading only slightly better than the S&P 500 index, which fell slightly.
It seems that the main departments are not for sale.
Bloomberg reported after the market closed on Thursday that Intel’s UK-based peer Arm Holdings (ARM -2.40%) had approached the U.S. semiconductor giant about buying its products division. Financial News Agency, citing an anonymous “person with direct knowledge of the matter,” said the effort was rejected and Intel said the business was not for sale.
Selling the product division would have fundamentally changed Intel. It is one of the company’s two major divisions, the other being Intel Foundry Services (IFS) manufacturing division. Earlier this year, Intel made this split as part of a broader restructuring effort. There has been speculation that the embattled chipmaker is preparing to split into two separate companies.
It’s unclear how much Arm Holdings planned to pay for the product division. Neither the company nor Intel have yet commented on the Bloomberg report.
Are you in a glass-half-empty or glass-half-full situation?
The sideways movement in Intel’s stock following this news shows investors’ differing opinions on these sales. On the other hand, it would provide the company with significant capital to focus on its foundry ambitions. On the other hand, it completely eliminates a core part of the business. Going forward, management will be under pressure to improve the performance of its product divisions.
Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Intel and recommends the following options: November 2024 $24 short calls on Intel. The Motley Fool has a disclosure policy.
