Silver Lake and Bain Seek Stake in Intel's Altera Unit

Private equity firms Silver Lake and Bain Capital are preparing to make bids for a minority stake in Altera, Intel (NASDAQ:INTC)'s programmable chip division, according to sources familiar with the ongoing discussions. Altera, which Intel acquired for approximately $17 billion in 2015, was in the process of spinning off as an independent entity. Recently, Intel initiated the sale process for part of Altera and expects to receive initial bids in the coming weeks.

Another private equity firm, Francisco Partners, has also expressed interest in acquiring shares in Altera and is expected to participate in the bidding. The details of the potential deal, including the size of the stake for sale, have not yet been disclosed, but the transaction is expected to be valued in the billions of dollars.

Altera reported revenue of $412 million for the quarter ending September 30, a 14% increase from the previous quarter. Intel CEO Pat Gelsinger stated during last week's earnings call that the company intends to sell shares in Altera ahead of a planned initial public offering (IPO) in early 2025.

Intel is pursuing a valuation close to what it paid for Altera in 2015, aiming to strengthen its financing by divesting unsustainable businesses through profitability while reducing costs. Despite offering a positive revenue outlook in its latest quarterly report, Intel's stock has fallen by more than 50% over the year amid challenges in the artificial intelligence sector and efforts to revive its business.

Based in San Jose, California, Altera produces programmable chips used in various applications, including video processing and telecommunications. Before being acquired by Intel, Altera had its chips manufactured by Taiwan Semiconductor Manufacturing Co (TSMC). After the acquisition, Intel aimed to integrate Altera's chip production into its own facilities, but this move ultimately led to a loss of market share to Altera's rival, Xilinx, which is now acquired by AMD.

Intel, Silver Lake, Bain Capital, and Francisco Partners did not provide additional comments beyond the initial statements or responses to inquiries. The potential sale of Altera is seen as part of Intel's strategy to overcome financial difficulties and refocus its business operations.