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Private Equity Giants Eye Minority Stake in Intel’s Altera Chip Unit

By  |  November 4, 2024

Intel Corporation is exploring the sale of a minority stake in Altera, its programmable chip subsidiary, with buyout firms Silver Lake and Bain Capital among the leading contenders, according to sources familiar with the matter as cited by Reuters. Intel acquired Altera for approximately $17 billion in 2015, and the company is now looking to spin it off as an independent entity, preparing for an initial public offering (IPO) in the coming years.

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    Intel has recently begun reaching out to potential investors for the sale, which it sees as a stepping stone toward Altera’s potential IPO, per statements by Intel CEO Pat Gelsinger during a recent earnings call. While early in the process, Intel’s conversations with prospective buyers indicate a high level of interest from prominent private equity players, including Francisco Partners, according to insiders who requested anonymity due to the sensitive nature of the negotiations.

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    The sale talks are at an initial stage, and Intel is preparing to receive bids in the upcoming weeks, insiders reported. According to Reuters, Intel is aiming to secure a valuation for Altera that aligns closely with its original $17 billion purchase price. However, it remains uncertain how much of the stake Intel will ultimately offer or whether the negotiations will yield a finalized deal, the sources cautioned.

    Related: Intel’s $1.45 Billion EU Antitrust Battle Officially Over

    With Altera posting solid performance growth, Intel is optimistic about the unit’s future. For the third quarter ending September 30, Altera reported revenue of $412 million, marking a sequential growth rate of 14%, according to Intel’s financial disclosures. Gelsinger reiterated Intel’s strategic intent, telling analysts that the company expects to wrap up investor discussions in early 2025, with plans to leverage the stake sale as a pathway to Altera’s IPO in the future.

    Intel’s potential stake sale reflects a broader trend among semiconductor companies seeking to capitalize on the ongoing demand for specialized chip technology. Altera, known for its field-programmable gate arrays (FPGAs), serves key industries including telecommunications, automotive, and cloud computing. The unit’s technological relevance and Intel’s strategic roadmap have made it an attractive target for private equity, positioning it as one of the sector’s most anticipated investment opportunities.

    Source: Reuters