Why Intel Stock Wilted on Wednesday
Intel's stock fell 1.5% amid reports that Qualcomm is delaying its acquisition interest until after the presidential election for clarity on U.S.-China relations and antitrust concerns. This decline occurred while the S&P 500 rose by 0.5%. Both companies have not commented on the situation, and investors are advised against making trades based on potential merger developments.
Intel (INTC -1.54%) wasn't having a great week, with fresh news sending its share price down yet again on Wednesday. The company's stock lost 1.5% of its value on a report that a potential suitor is apparently in wait-and-see mode regarding an acquisition. That decline contrasted with the S&P 500 index's positive day, as that closely watched indicator rose by 0.5%.
A rich suitor reportedly hesitates
That suitor is fellow U.S. chipmaker Qualcomm. According to an article published in Bloomberg, it will wait until after the upcoming presidential election -- perhaps past the January inauguration -- to determine whether to keep pursuing Intel as an acquisition target.
Citing unnamed "people familiar with the matter," the business news agency said that Qualcomm management "wants greater clarity," on the country's next leader. This particularly applies to their stance on the U.S.-China relationship, and their views on antitrust law.
The latter would be an issue in any Qualcomm-Intel combination. That's because a merged company blending the two businesses would be dominant in the chip sector, at least in the U.S. Regulators abroad would also surely be concerned, given the global reach and power of such an enterprise.
Mum's the word for now
Neither Intel nor Qualcomm has yet commented on the Bloomberg report, and given the embryonic-at-best stage of any potential takeover saga, they are unlikely to anytime soon. Given that, investors shouldn't trade on the basis of an eventual tie-up. The two presidential candidates are vastly different and diverge significantly on policy, so the ultimate winner will be a major part of how this story develops.