Intel buys Mobileye in $15bn deal

May 2017 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

In a deal combining technology and talent designed to accelerate the future of autonomous driving, Intel Corporation is to acquire Mobileye N.V. for approximately $15bn.

Under the terms of the definitive agreement, a subsidiary of Intel will commence a tender offer to acquire all of the issued and outstanding ordinary shares of Mobileye for $63.54 per share in cash, representing a fully-diluted equity value of approximately $15.3bn and an enterprise value of $14.7bn.

Once complete, the acquisition will couple the best-in-class technologies from both companies, including Intel’s high-performance computing and connectivity expertise and Mobileye’s leading computer vision expertise to create automated driving solutions from the cloud through the network to the car. Together with partners and customers, Intel and Mobileye expect to deliver driving solutions that will transform the automotive industry.

The combination of Intel and Mobileye is also expected to accelerate innovation for the automotive industry and position Intel as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles. Intel estimates the value of the vehicle systems, data and services market to be $70bn by 2030.

“This is a great step forward for our shareholders, the automotive industry and consumers,” said Intel chief executive, Brian Krzanich. “Intel provides critical foundational technologies for autonomous driving including plotting the car’s path and making real-time driving decisions. Mobileye brings the industry’s best automotive-grade computer vision and strong momentum with automakers and suppliers. Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.”

The acquisition will support both companies’ existing production programmes and build upon relationships with automotive OEMs, Tier-1 suppliers and semiconductor partners to develop advanced driving assist, highly autonomous and fully autonomous driving programmes.

The global leader in the development of computer vision and machine learning, data analysis, localisation and mapping for advanced driver assistance systems and autonomous driving, Mobileye’s products are or will be integrated into car models from more than 25 global automakers.

“We expect the growth towards autonomous driving to be transformative,” said Ziv Aviram, Mobileye co-founder, president and chief executive. “It will provide consumers with safer, more flexible, and less costly transportation options, and provide incremental business model opportunities for our automaker customers.” He added: “By pooling together our infrastructure and resources, we can enhance and accelerate our combined know-how in the areas of mapping, virtual driving, simulators, development tool chains, hardware, data centers and high-performance computing platforms.”

The combined global autonomous driving organisation, which will consist of Mobileye and Intel’s Automated Driving Group, will be headquartered in Israel and led by Professor Amnon Shashua, Mobileye’s co-founder, chairman and chief technology officer. Intel’s senior vice president Doug Davis will oversee the combined organisation’s engagement across Intel’s business groups and will report to Professor Shashua following the closing of the transaction.

Serving as financial advisers to Intel are Citi and Rothschild Inc., while Skadden, Arps, Slate,

Meagher & Flom LLP is providing legal counsel. For Mobileye, Raymond James & Associates,

Inc. and Morrison & Foerster LLP are financial adviser and legal counsel, respectively.

Expected to be accretive to Intel’s non-GAAP EPS and free cash flow immediately, the acquisition is to be funded with cash from the Intel balance sheet and has been approved by the Intel and Mobileye boards of directors and is subject to the receipt of certain regulatory approvals and other closing conditions. Furthermore, the offer is not subject to any financing conditions and is expected to close by the end of 2017.

Enthused by a deal which builds on both companies’ strengths, Mr Aviram concluded: “Together, we will provide an attractive value proposition for the automotive industry.”

Fraser Tennant