Intel Corporation INTC has set its foot firmly in the fast-growing market for fully autonomous vehicles by agreeing to buy Israel-based Mobileye NV MBLY for about $15.3 billion.
Intel will pay $63.54 for each share of Mobileye, representing a premium of 34.4 percent over March 10 closing price. The deal has an enterprise value of $14.7 billion.
The deal will combine technologies from both companies that spans across connectivity, computer vision, data center, sensor fusion, high-performance computing, localization and mapping, machine learning and artificial intelligence.
Huge Opportunity For Intel
The deal also diversifies Intel from weak PC market to the autonomous car market where the data is expected to increase manifold. The deal comes as Intel is gaining share at Apple Inc. AAPL.
Intel estimates the vehicle systems, data and services market opportunity to be up to $70 billion by 2030.
Intel expects that by 2020, autonomous vehicles will generate 4,000 GB of data per day, which plays to Intel's strengths in high-performance computing and network connectivity.
Intel said the complexity and computing power of highly and fully autonomous cars creates large-scale opportunities for high-end Intel Xeon processors and high-performance EyeQ4 and EyeQ5 SoCs, high-performance FPGAs, memory, high-bandwidth connectivity, and computer vision technology.
“Together, we can accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers,” Brian Krzanich, Intel CEO, said in a press release.
Deal Accretive To Intel
"We expect the growth towards autonomous driving to be transformative. It will provide consumers with safer, more flexible, and less costly transportation options, and provide incremental business model opportunities for our automaker customers," said Ziv Aviram, Mobileye Co-Founder, President and CEO, commented on the deal.
The combined global autonomous driving organization, which will consist of Mobileye and Intel's Automated Driving Group, will be headquartered in Israel and led by Prof. Amnon Shashua, Mobileye's Co-Founder, Chairman and CTO.
"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. Together, we will provide an attractive value proposition for the automotive industry," Aviram added.
The deal is expected to be accretive to Intel's non-GAAP EPS and free cash flow immediately. Intel, which intends to fund the acquisition with cash from the balance sheet, plans to close deal within the next nine months.
In the pre-market hours, Mobileye surged 31.06 percent to $61.95, while Intel shares fell 1.5 percent to $35.38.
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