Everything About Intel Corporation’s $15B Bet on Self-Driving Cars (NASDAQ:INTC)

Intel Corporation (NASDAQ: INTC)
A row of Ford Fusion Hybrid data collection cars sit in the parking lot at Intel Corporation's Chandler Advanced Vehicle Lab in Chandler, Ariz., in February 2017. Sensor-laden cars from the lab, part of the company's Automated Driving Group, drive nearby streets collecting information to create so-called deep learning models that will provide data for future vehicles that will drive themselves. (Credit: Tim Herman/Intel Corporation)

Intel Corporation (NASDAQ:INTC) has signed a deal to acquire Mobileye N.V. (NYSE: MBLY) for about $15.3 billion.

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Mobileye is engaged in the development of computer vision and machine learning, data analysis, localization and mapping for advanced driver assistance systems and autonomous driving.

Mobileye is engaged 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, 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 an equity value of about $15.3 billion and an enterprise value of $14.7 billion.

According to Intel, the vehicle systems, data, and services market is estimated to be $70 billion by 2030.

“The combination is 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 said in a filing with the U.S. Securities and Exchange Commission.

“This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” Intel CEO Brian Krzanich said in the filing.

“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,” Krzanich added.

Intel, Mobileye Plan to Build ‘Innovative’ Driving Solutions

Intel Corporation (NASDAQ:INTC) said that the acquisition will allow it to “combine the best-in-class technologies from both companies.” Those technologies include connectivity, computer vision, data center, sensor fusion, high-performance computing, localization and mapping, machine learning and artificial intelligence.

The companies plan to work together to build driving solutions that “will transform the automotive industry.”

Intel said it will establish a global autonomous driving organization by merging Mobileye and Intel’s Automated Driving Group. Headquartered in Israel, the organization will develop advanced driving assist, highly autonomous and fully autonomous driving programs.

Amnon Shashua, who is co-founder, chairman and chief technology officer of Mobileye, will lead the combined global autonomous driving organization. Reporting to Shashua, Intel Senior Vice President Doug Davis will oversee the organization’s engagement across the company’s business groups.

“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,” Mobileye Co-Founder, President and CEO Ziv Aviram said in a statement.

“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.

According to Intel, fully autonomous cars would be the big consumer of data. The company expects that, by 2020, autonomous vehicles will generate 4,000 GB of data per day.

The company believes that the complexity and computing power of fully autonomous cars will create opportunities for its high-end Xeon processors, Eye Q4, Eye Q5 SoCs, FPGAs, memory, high-bandwidth connectivity, and computer vision technology.

Transaction

Intel Corporation (NASDAQ:INTC) intends to fund the acquisition with cash from the balance sheet.

The deal has received approvals from the Intel and Mobileye boards of directors.

Subject to certain regulatory approvals and other closing conditions, the transaction is expected to close within the next nine months.

The offer is not subject to any financing conditions.

Citi and Rothschild serve as financial advisors, while Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel to Intel. Raymond James & Associates is serving as a financial advisor, while Morrison & Foerster LLP is acting as a legal counsel to Mobileye.

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