However, the US can vote “as it wishes,” Intel reported, and experts suggested to Reuters that regulations may be needed to “limit government opportunities for abuses such as insider trading.” That could reassure investors somewhat, Rich Weiss, a senior vice president and chief investment officer of multi-asset strategies for American Century Investments, told Reuters. Without such laws, Weiss noted that “in an unchecked scenario of government direct investing, trading in those companies could be much riskier for investors.”
It also seems possible that the US could influence Intel’s decisions without the government explicitly taking voting control, experts suggested. “Several investors and representatives” told Reuters that the US could impact major decisions regarding things like layoffs or business shifts into foreign markets. At a certain point, Intel may be stuck choosing between corporate and national interests, Robert McCormick, executive director of the Council of Institutional Investors, told Reuters.
“A government stake in an otherwise private entity potentially creates a conflict between what’s right for the company and what’s right for the country,” McCormick suggested.
Further, Intel becoming partly state-controlled risks disrupting Intel’s non-US business, subjecting the company to “additional regulations, obligations or restrictions, such as foreign subsidy laws or otherwise, in other countries,” Intel’s filing said.
In the filing, Intel confirmed directly to investors that they have good cause to be spooked by the US stake. Offering a bulleted list, the company outlined “a number of risks and uncertainties” that could “adversely impact” shareholders due to “the US Government’s ownership of significant equity interests in the company.”
Perhaps most alarming in the short term, Intel admitted that the deal will dilute investors’ stock due to the discounted shares issued to Trump. And their shares could suffer additional dilutions if certain terms of the deal are “triggered” or “exercised,” Intel noted.
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