The American multinational corporation Intel has agreed to buy Israeli driverless expertise firm Mobileye for $15.3 billion. This is largest ever acquisition of an Israeli technological company. The deal happened on Monday pushing Intel into direct competition with rivals Qualcomm Inc and Nvidia Corp to manufacture driverless systems for worldwide automakers.
This exorbitant transaction also happens to be one of the biggest purchases of a company across the globe which are exclusively concentrated on the independent driving sector. The Mobileye accounts for 70 % of the world’s market for anti-collision systems and advanced driver-assistance.
Intel and Mobileye
Intel is a major player in the sector and has been investing in several start-up companies. It is manufacturing various components such as sensors and robotics for self-driving systems.
Mobileye’s productions include cloud software, cameras, data fusion and management, sensor chips, machine learning and roadway mapping.
Mobileye has been dependent on Franco-Italian chipmaker STMicroelectronics for the production of chips for several years. Mobileye then sells them to some of the globe’s best automakers for its current, third-generation of driver-assistance systems.
Mobileye who had already collaborated with BMW has now also partnered with Intel. Together they will be working on the fifth generation of chips which will be used in autonomous vehicles. The vehicles need to be delivered in 2021.
When to Expect the Final Deal to Happen
The company is expected to close the deal in the next nine months. So it can boost it’s non-GAAP earning per share along with the free cash flow.
An analyst at the Loop Capital Markets, Betsy Van Hees said that it was a great opportunity for Intel to put their hands in a market where the opportunities to grow were terrific. Mobileye’s technology is extremely critical, and the price of the deal was fair, she added.
The industry newsletter Semiconductor Advisors wrote on Monday that Intel’s acquirement of Mobileye shows strategic move “very far away outside its heart business franchise.”
What’s in for Mobileye
Mobileye is being paid a premium of 60 times its earnings, about four times the premium that Netherland’s NXP receives from Qualcomm.
The US$63.54 (RM282.75)-per-share cash deal signifies a premium of around 33% to Mobileye’s closing price of US$47 (RM209.10) on Friday, but lower than its unsurpassed high closing price of US$64.14 (RM285.42) in August 2015.
Intel’s shares were down by 2.1% whereas Mobileye saw a rise in its shares by 28.2% to close at US$60.62 (RM269.55).
Mobileye will get its independence, assimilating Intel’s self-automated driving group with Mobileye’s operation under the Chairman of Mobileye, Amnon Shashua. Shashua will lead this operation from Israel.
The chief of Intel, Brian Krzanich said that the procurement was similar to the integration of “eyes of the autonomous car with the intelligent brain that actually drives the car.”
Mobileye used to supply visions systems to Tesla earlier. Both the companies split their ways last year when one of the Tesla Model S driver was killed while functioning the vehicle with Tesla’s Autopilot system.