Written by Ross Kerber
(Reuters) -The share of the new US government in Intel (INTC) makes some investors tense that President Donald Trump’s deal is exposed to an era of government interfering in the private industry, especially since the arrangement followed Trump’s invitation to the resignation of CEO CHIP.
The deal, which was announced on Friday, turned $ 11.1 billion from granting chips and other government financing to 9.9 % of the Intel shares. The company’s press statement, which announced the deal, included data from Microsoft CEOs (MSFT), Dell (Dell) and other companies that construct this step.
Investors said that this level of the pathway is not usually related to the relations between companies and Washington.
Trump had said on social media that the CEO of Intel wanted to keep his job and “ended up giving us $ 10 billion to the United States.”
“This puts a bad precedent if the president can obtain 10 % of the company by threatening the CEO,” said James Macrichi, a private investor and activist for shareholders in California who owns Intel shares. He said that the statement actually sends a message that “we love Trump, and we do not want 10 % of our company.”
Intel shares were closed at $ 20.41 on August 6, the day that Trump had previously called the resignation of Tan, and went to the top until it ended at $ 24.56 on August 15, the last day of trading before Trump’s conditions appeared. On Tuesday, Intel closed 1 % at $ 24.35. The deal does not grant the seats of the Board of Directors of the US Department of Commerce, according to the Securities Report, and the trade requires the support of the Board of Directors for candidates and proposals. But trade can vote “as he wishes” in many other things.
Fitch Ratses said the deal does not improve the Intel BBB credit rating, which is located above an unwanted position. In a research note on Tuesday, Fitch said that although it provides more liquidity, it does not improve customer request mainly on Intel chips.
The Intel file also states that the deal reduces current shareholders, reduces their voting rights, and can be subject to the company to additional restrictions or restrictions in other countries. What’s more, CEO Tan said that Intel did not need money. Softbank poured two billion dollars in the chips maker three days before Trump’s announcement.
This was the latest unusual intervention in a private company by the White House Trump, after a military agreement for the mining company’s share announced in July and the influence on the American steel as part of its purchase by Nippon Steel in Japan. On Tuesday, US Trade Minister Howard Lootnick said that the Trump administration may take stakes in the defense contractors.
However, American moves can be considered a work as usual in a number of European and Asian countries whose governments already have parts of major companies. The lower German state of Saxony has 20 % share in Volkswagen, for example.
“This has continued for years with the Japanese government, the Korean government, the Taiwanese government, the Singaporean government, and the Malaysian government,” said Richard Hardegery, Vice Chairman of the Investment of Technology in UBS. “In Italy, in France, they have made huge amounts of industrial policy on the semiconductor industry … for 40 or 50 years, since everyone discovered that semi -conductors are important.”
During the 2008-2009 financial crisis, Washington also held royal rights positions in many endangered biological companies, but these arrangements were temporary. The pressure on health companies was unprecedented in the risks of ownership in the long run, and this step has caused anxious investors.
Rich Weiss, the first vice president and head of investment in the multiple assets strategies of the American century, said future federal investments “will need regulations and guidelines to reduce the opportunities for violations such as trading from within.”
“In an undesirable scenario for government direct investment, trading in these companies may be more dangerous for investors,” he said.
Many investors and representatives were martyred with similar risks, such as when the councils weigh the competing interests on decisions such as the location of the location of a new factory, whether workers are demobilized, or how difficult it is to pressure foreign markets.
Robert McCramek, Executive Director of the Institutional Investment Council, said the national goals can easily conflict with such matters.
“It is possible that a government share in a private entity will create otherwise a struggle between what is appropriate for the company and what is appropriate for the country,” he said.
“She has more questions of confidence” about the share of stocks. NIA runs in Intel for customers, and has its money in other chips, including the manufacture of semiconductors in Taiwan (TSM) and advanced fine devices (AMD).
“I think the lines between the government’s place and where are the private sector, we really make some lines here,” Hull said in an interview.
Intel representative said that the company council approved the deal to issue shares. The actor did not comment more. When asked about internal coronary fears, the actor was martyred in a line in the press statement that the United States government would not represent any representation of the board of directors, “governance rights or other information.”
A representative of Microsoft refused to comment. Del representatives did not answer the questions.
A major institutional investor, who speaks, said, provided that his identity is not disclosed due to the sensitivity of the situation, that the deal can protect Intel from pressure by active investors.
But the person warned that if the United States government continues to take risks in other companies, this may be a disturbing step towards state capitalism.
The investor said: “Seeing this happens once, for a company like this, does not raise red flags, it raises the eyebrow. But if this becomes a tool becomes more prevalent, we will have to look at the reason for using this tool and why the capital market does not provide funding.”
(Participated in Ross Kerber reports in Boston and Don Kubiki in New York. Editing by Dawn Kopecki and David Gregorio)
