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Investing.com -- Intel Corporation (NASDAQ:INTC) stock climbed 3% in trading Monday following the company’s announcement that it has sold 51% of its programmable chips division, Altera, to private equity firm Silver Lake Management for $4.46 billion.
The deal comes as part of Intel’s strategic shift to divest non-core businesses, aiming to streamline operations and focus on its main areas of growth. Intel CEO Lip-Bu Tan said, "Today’s announcement reflects our commitment to sharpening our focus, lowering our expense structure and strengthening our balance sheet."
Intel’s acquisition of Altera in 2015, for approximately $17 billion, brought the multi-use chips, which are commonly used in telecommunications networks, into its portfolio. The current deal values Altera at $8.75 billion, as Intel has nearly halved its original investment in the company. This lower valuation is reportedly caused by Altera attracting interest from other companies, including Lattice (OTC:LTTC) Semiconductor Corp. and various buyout firms.
Intel will retain a 49% stake in Altera, allowing it to "participate in Altera’s future success while focusing on its core business." Additional announcements include the appointment of Raghib Hussain as CEO, succeeding Sandra Rivera. The management transition is expected to place on May 5.
The move is seen as a continuation of Intel’s efforts, announced earlier in 2024, to restructure its business by shedding less essential assets. The sale of Altera is expected to allow Intel to reallocate resources and capital towards more profitable and central segments of its operations.
(Senad Karaahmetovic also contributed to this article)