Last year October we saw Qualcomm announcing a $47 billion deal to acquire NXP. Now that approach has paid off handsomely for Mobileye's shareholders, with an agreement to be acquired by Intel for $15 billion ($63.54 per share). That's below Mobileye's record high closing price of $64.14 in August 2015 after Morgan Stanley raised its target price on the shares to $80. Mobileye N.V. (NYSE:MBLY) shares advanced 0.56% to $60.96 on Tuesday.
While leveraging Mobileye to strengthen its existing collaboration with BMW, Intel can also leverage Mobileye's close relationships with carmakers and avoid the lengthy product verification process that new market entrants are often being subjected to.
Mobileye was founded in 1999. Amnon Shashua, of the Hebrew University, and Ziv Aviram. REM has attracted significant attention as this technology can assist in the further development of autonomous driving systems by creating real-time maps.
The company develops driver assistance systems and is considered one of the leading developers of automated vehicle technology. "Mobileye is also working with European commercial vehicle manufacturers to provide collision mitigation technology". The deal is worth $15.3 billion.
Intel is going to offer an unusual autonomy that integrates their automated driving group with Mobileye's operations.
Another piece of the Mobileye acquisition pricing puzzle is an activity that Mobileye has just now begun - the gathering of visual data produced from its sensors installed on millions of vehicles for the goal of generating up-to-date high-resolution maps of the world's roads.
Intel CEO Brian Krzanich said in a statement, "Mobileye brings the industry's best automotive-grade computer vision and strong momentum with automakers and suppliers". "They have captured a piece of what should be a fast-growing market". If you add in the opportunity from data-center and cloud-computing revenue, the total addressable market could reach $110 billion. Mobileye controls about 70 percent of the world market for driver assistance systems such as automatic braking, lane centering and pedestrian detection.
But there are still a number of obstacles to overcome.
The rise of mobile devices caused a decline in the personal computer market and undercut Intel's growth and influence in the technology business. After the deal, Intel and BMW will negotiate with just each other.
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Now, the company will soon compete with fellow business industries like Tesla and Nvidia in driverless vehicle technology.
"Tech firms are hunting for ever more data". They are projecting Next Quarter growth of 8.5%. The addition of assets from Mobileye will considerably strengthen Intel's position in the automotive chip market. Most prominent among them is German carmaker BMW in partnership with Mobileye for developing self-riving auto technology.
While drivers may not be spooked by access to their aggregated mapping and navigation data, they may balk at sharing personal data and preferences, McKinsey wrote a year ago. Though cars that are fully autonomous are a long way off, Intel seems to have decided that a hefty price for Mobileye now is better than a future where it is only an afterthought in the autonomous vehicle segment. "I would like to thank the media for their positive coverage and well-wishes for us".
It's not Intel's first dabble in the automotive field.
"Much of Mobileye's current business is designing autonomous safety systems for heavy trucks", CNBC said.
In the high-profile case of the Tesla that drove into a semi previous year, Mobileye's camera system got some of the blame.
"I am sure we will continue to be a pioneering country, which the countries of the world look at and admire", he said.
Science, Technology and Space Minister Ofir Akunis (Likud) said, "Israel is a powerhouse of knowledge, technology, and innovation". This shows how strong Israel's technology industry is.