Intel to buy driverless car-tech firm Mobileye for $15B US
Mobileye accounts for 70% of the global market for driver-assistance and anti-collision systems
U.S. chipmaker Intel agreed to buy driverless car-technology firm Mobileye for $15.3 billion US on Monday, positioning itself for a dominant role in the autonomous-driving sector after missing the market for mobile phones.
The $63.54 US-per-share cash deal marks the largest purchase of a company solely focused on the self-driving sector.
Mobileye's shares jumped rose more than 28 per cent to end at $60.62 on the NYSE, while Intel's shares fell more than two per cent to close at $35.16 US.
The deal underscores the expanding alliances between automakers and their suppliers as they race to develop self-driving cars, a concept that once seemed a science-fiction dream but is drawing closer to reality.
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While Intel is known for hardware chips and Mobileye for collision detection software, the merger promises to create a large portfolio of technologies needed for driverless vehicles.
That includes cameras, sensor chips, in-car networking, roadway mapping, machine learning and cloud software, as well as the data-centers needed to manage all the data involved.
"It's an area where (Intel) has had very little presence - the automotive market, and so this is a tremendous opportunity for them to get into a market that has significant growth opportunities," said Betsy Van Hees, an analyst at Loop Capital Markets.
"Mobileye's technology is very critical ... The price seems fair," she added.
The offer represents a premium of about 33 per cent to Mobileye's Friday closing price of $47 US.
Intel will integrate its automated driving group with Mobileye's operations, with the combined entity being run by Mobileye chairman Amnon Shashua from Israel.
Intel chief executive Brian Krzanich said the acquisition was akin to merging the "eyes of the autonomous car with the intelligent brain that actually drives the car."
Mobileye supplies cameras, chips and software for driver- assist systems - the building blocks for self-driving cars - to more than two dozen manufacturers.
The company was an early supplier of vision systems to Tesla, but the two companies had an acrimonious and public breakup last summer after the driver of a Tesla Model S was killed while operating the vehicle using Tesla's Autopilot system.
Intel said it expects the vehicle systems, data and services market to rise to $70 billion by 2030.
Mobileye, founded in 1999, accounts for 70 per cent of the global market for driver-assistance and anti-collision systems. It employs 660 people and had adjusted net income of $173.3 million last year.
Analysts said that mounting a counterbid would be difficult as Mobileye's Shashua would remain in charge and the combined entity would be based in Israel.
Shashua and two other senior Mobileye executives stand to do well by the deal: together they own nearly 7 percent of the company. Shmuel Harlap, Israel's biggest car importer and one of Mobileye's earliest investors, also holds a 7 percent stake.
Mobileye and Intel are already collaborating with German automaker BMW on a project to put a fleet of around 40 self-driving test vehicles on the road in the second half of this year.
At the same time, Mobileye has teamed up with Intel for its fifth-generation of chips that will be used in fully autonomous vehicles that are scheduled for delivery around 2021.