Activism comes to tech

Darren Sinden

Could Intel be persuaded to separately list its foundry and manufacturing business and to do that through a Third Point managed acquisition vehicle or SPAC?

new-york-city

US hedge fund manager Dan Loeb has been in the news in closing stages of 2020. The 59-year-old is the founder and CEO of Third Point, which focuses on event-driven and value-oriented investment strategies.

The fund which was founded in 1995 has a history of taking stakes in underperforming companies and then lobbying for change, be that in terms of the company’s management, its business plan or both.

The end goal of this is to realise shareholder value for Third Point and other investors. As of June 2020, Third Point has just over $21.0 billion in assets under management (AUM).

The New York-based hedge fund has reportedly filed plans to launch a SPAC, an acronym referring to a blank cheque company which it would list and likely use as an acquisition vehicle by reversing an existing business into the shell.

The hedge fund would look to raise around $300 million via the listing which could be completed by February and would be managed by Third Point Ventures, the private equity and venture cap arm or Mr Loeb’s business.

Third Point Ventures is active in the Technology, Fintech and Healthcare spaces previous investments include Palantir, Wish, Rubicon and Swift Capital.

Among the fund’s current Fintech investments is SoFi an online lender with a specialism in refinancing student debt, mortgages and personal loans and which has a loan book in excess of $3.0 billion according to funds website.

Though Third Point ventures have given no indication of what the target of the SPAC listing would be SoFi might fit the bill quite nicely.

However, perhaps there is another target on the Third Point radar because the hedge fund is said to have a taken a billion-dollar stake in Intel one of the worlds largest manufacturers of microprocessors and silicon chips.

Intel is a giant corporation with a market cap of almost $200 billion and its chips are used in millions of laptops PCs and other devices across the globe. However, Intel shares have dramatically underperformed both sector indices and the wider technology market in 2020.

Intel’s stock is down by -18.89% year to date whilst the Nasdaq 100 is up by some 46.0%, and the Philadelphia Stock Exchange Semiconductor index has risen by just over 50.0% during 2020.

Intel shares stumbled and sold off earlier this year when the company announced delays to the fabrication of its next generation of chips. An issue that was compounded by the likes of Apple pressing ahead with plans to develop its own range of processors. Using designs from Intel’s rival ARM which is itself being acquired for $40.0 billion by another of Intel’s competitors Nvidia.

Against this background, the Wall Street Journal reports that Mr Loeb has written to Intel’s Chairmen Omar Ishrak urging the company’s management to take action including making disposals or more dramatically to split its design and manufacturing businesses in two.

Could Intel be persuaded to separately list its foundry and manufacturing business and to do that through a Third Point managed acquisition vehicle or SPAC?

This is pure supposition on my part and I might be pushing the envelope too far but it’s an intriguing prospect and the timings could fit, in theory.

This will certainly be a story to watch closely as 2021 gets underway.

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