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Intel's Shaky M&A Track Record

Intel's Shaky M&A Track Record

Mobileye NV (NYSE: MBLY) shares shot up 30 percent after Intel Corporation (NASDAQ: INTC) announced a blockbuster $15.3 billion buyout of the driverless car technology company. Mobileye shareholders are cheering the big move, but short sellers such as Citron Research are getting burned by the news.

Citron’s timing on its Mobileye short couldn't have been worse. Less than a month ago, Citron argued “Mobileye is now ripe as a short.” Today, the firm admitted defeat and said it's moving on. However, it also highlighted a disturbing trend in the tech industry.

Related Link: Why Mobileye, Not Nvidia, Is Ripe For Short Sellers

“As we know, not all tech acquisitions turn out successful for the acquirer, but today is undoubtedly Mobileye’s day and we tip our hat,” Citron’s Andrew Left tweeted.

When it comes to Intel, the recent buyout track record has been far from perfect. In 2014, Intel paid $100 million for wristwatch health tracking technology company Basis. Last year, Intel recalled its Basis Peak smart watch due to overheating problems and didn't offer customers replacements. It also ended its program of cloud fitness data storage for Peak users.

Intel also paid a steep $7.68 billion price to buy out McAfee back in 2010. Within six years, Intel unloaded McAfee assets to TPG for only $4.2 billion.

Citron called the Mobileye buyout at 30x revenue a “head-scratcher,” and Intel’s 1.7 percent drop on Monday suggests the market is also a bit skeptical of the deal. Intel has struggled to gain its footing so far in 2017. Shares are down 2.3 percent year-to-date.

Latest Ratings for MBLY

Apr 2017DowngradesOutperformNeutral
Mar 2017DowngradesOverweightNeutral
Mar 2017DowngradesBuyNeutral

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