Intel to Buy Dialogic for $780 Million

Intel Corp. on Tuesday agreed to buy Dialogic Corp. for about $780 million in cash to add products that combine phone and computer systems using the Internet. In its first foray into the telecommunications market, the chip-making giant said it will pay $44 for each share of Dialogic, a 32% premium to the stock’s close Friday. Intel has been pushing outside its traditional processor business as it has lost market share to rivals and as chip prices have fallen. Intel, whose chips power 90% of the world’s personal computers, wants to make its chips just as ubiquitous in the market for powerful servers that run telecommunications networks. Intel is betting that by adding Dialogic’s software and computer cards that move voice traffic onto computer networks, it can sell more servers and components that would help a company combine all its voicemail, e-mail and fax systems into one network that is accessible either by phone or computer. Parsippany, N.J.-based Dialogic already was working with software giant Microsoft Corp., which in March acquired a 5% stake in the company. Intel will buy the Microsoft stake, and the licensing pact will remain in place. Intel expects to begin the tender offer for Dialogic on Monday and to complete it July 2. Dialogic shares jumped $10.06 to close at $43.44, and shares in Santa Clara, Calif.-based Intel fell $3.38 to close at $50.69. Both trade on Nasdaq.