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Mergers: Intel to buy Infineon unit
The Intel logo outside of an Intel office in Santa Clara, Calif.
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TEXT OF STORY
BILL RADKE: The huge computer chip producer Intel is buying a division of the German chip maker Infineon for $1.4 billion. The deal was announced today. It will bolster Intel's wireless technology business. And it means August will go down as one of the busiest months of the past few years for mergers and acquisitions. Marketplace's Jeremy Hobson is with us live from our bureau in New York with more. Hi Jeremy.
JEREMY HOBSON: Hey Bill.
RADKE: Why is this a big deal for Intel?
HOBSON: Well, Intel has been looking to expand its reach beyond just computers. And this will help in that regard because Infineon gives Intel a way into the smartphone market. And specifically, Apple's iPhone 4, which uses Infineon's chips. And by the will, Bill, it's not just Intel that's deal-hungry right now. We heard today that the French company Sanofi-Aventis made public its $18 billion offer for the U.S. biotech firm Genzyme. And I would like to say that I don't come up with these names. I just have to say that.
RADKE: So all these mergers, Jeremy, how should the rest of us feel about this burst of deal making?
HOBSON: Well, we know companies are sitting on a lot of cash right now. So I guess it's a good thing that they're willing to get back into the game and starting spending. But I spoke with Howard Wheeldon, who's a senior strategist at BGC Partners in London, and here's what he said.
HOWARD WHEELDON: I've been in the industry over 40 years now and I can't remember an acquisition that's actually led to an enhancement of jobs. Jobs will go as a result of M&A activity. It's as sure as night follows day.
But Bill, despite layoffs initially, Wheeldon says this activity probably means growth down the road. As he put's it, mergers and acquisitions are capitalism's way of saying it's moving on.
RADKE: Moving on then. Marketplace's Jeremy Hobson in New York, thank you.
HOBSON: You're welcome, Bill.
Jay Chatzkle wrote:
Now that companies are commiting to making the significant acquisitions, they face the other side of the coin: What do we do next? This article very nicely articulates that bringing the resources together to do the deal does not mean that the company has the capabilities at hand to leverage the new opportunities that come with the acquisition.
Some firms like Intel have developed some degree of the core set of acquisition capabilities but even so will find that they are not prepared to move through the complex process of an effective integration, especially in a way that they can position themselves for the quantum leap gains that they may envision - and are possible in this unique window of opportunity.
It will be very interesting, for example to see if Intel can perform with this acquisition or HP or Dell has the wherewithall to make the most of its run on 3PAR. The emphasis on cost cutting at these companies may have whittled the kind of innovative thinking, dedication to building custodial capabilities and the disciplined processes that are necessary to meet this transformational challenge. For more information on an approach to accomplishing this, visit: http://www.beyondthedeal.net. That can give you an idea of what the array of issues are and how to work through them for significant gains.
Jay Chatzkel
