LONDON, UK / ACCESSWIRE / March 14, 2017 / Active Wall St. blog coverage looks at the headline from Mobileye N.V. (NYSE: MBLY) and Intel Corp. (NASDAQ: INTC). Intel announced on March 13, 2017, that under a definitive agreement, it would acquire Mobileye, a leading Company in the development of computer vision and machine learning, data analysis, localization and mapping for advanced driver assistance systems and autonomous driving. Under the terms of the agreement, a subsidiary of Intel will issue a tender offer to acquire all the ordinary shares of Mobileye for $63.54 per share in cash, while representing an equity value of approximately $15.3 billion and an enterprise value of $14.7 billion. Register with us now for your free membership and blog access at:
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The Autonomous Vehicle Portfolio
Autonomous vehicles are a part of the next logical step to be the biggest disruptive technologies of the 21st century. Driverless cars elevate traffic flow efficiency, boost passenger productivity, and reduce pollution dramatically by minimizing energy consumption. Approximately 1.2 million traffic-related fatalities are reported around the world annually, as per a report by the World Health Organization. However, researches indicate that autonomous cars could cut accident rates by up to 90% while potentially saving 10 million lives per decade.
Intel and Mobileye had already collaborated on multiple projects where the pair announced a partnership with BMW in July 2016 to facilitate an autonomous car on the streets by 2021. The two Companies then collaborated with auto parts maker Delphi, in November to deliver self-driving car system which could be sold to automakers.
Intel® GOTM Automated Driving Solution
Intel has been working constantly to deliver on partnerships and establish robust industry standards to offer a definitive solution. The Company is working with multiple carmakers and Tier 1 automotive suppliers to deliver comprehensive building blocks to offer the safest automated driving systems to market, through the launch of the Intel® GOTM platform. This solution supports multiple architectures from traditional CPUs to field-programmable gate arrays and hardware acceleration technology for deep learning. The Intel® GOTM Automated Driving Solution has built-in support for functional safety features, multilayered security, and it is the industry's first 5G-ready development platform for automated driving.
Prospects from the Transaction
Intel views multiple growth opportunities and innovation for the automotive industry through this acquisition. The Company estimates the vehicle systems, data, and services market opportunity to hit $70 billion mark by 2030. This agreement extends Intel's strategy to bank on data-intensive market opportunities while building the Company's strength in computing and connectivity from the cloud, through the network, to the device.
Intel recently ramped up its efforts in the self-driving car industry. It formed an automated driving group on November 15, 2016, and funded it with an R&D budget of $250 million. Intel additionally invested in Nokia Corporation's (NYSE: NOK) Here mapping division to boost its credibility. The Company views multiple growth opportunities through developments in the autonomous vehicle industry.
The acquisition will help seamlessly integrate the best-in-class technical infrastructure from both the Companies, where under collaboration with partners and customers, they will deliver driving solutions which would transform the automotive industry. This agreement will lead to the development of a combined global autonomous driving organization which will comprise of Mobileye and Intel's Automated Driving Group. Intel anticipates that by year 2020, autonomous vehicles will generate 4,000 GB of data per day, which would eventually strengthen Intel's high-performance computing and data connectivity.
Details of the Transaction
The transaction is expected to be accretive to Intel's non-GAAP EPS and free cash flow immediately. Intel intends to fund the acquisition with cash from the balance sheet. The transaction is expected to close within the next nine months where the offer is not subject to any financing conditions.
Stock Performance
On Monday, March 13, 2017, the stock closed the trading session at $60.62, surging 28.24% from its previous closing price of $47.27. A total volume of 88.33 million shares have exchanged hands, which was higher than the 3-month average volume of 3.64 million shares. Mobileye's stock price surged 41.47% in the last month, 67.23% in the past three months, and 73.25% in the previous twelve months. Furthermore, on a year to date basis, the stock soared 59.02%. At Monday's closing price, the stock's net capitalization stands at $13.33 billion.
Intel's stock fell by 2.09%, closing Monday's session at $35.16 on volume of 52.12 million shares. The company's shares rallied 14.17% in the last twelve months. The Company's shares are trading at a PE ratio of 16.62 and have a dividend yield of 2.96%. The stock currently has a market cap of $166.21 billion.
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