Another takeover bid in the tech-auto industry has been made by tech giant Intel Corporation with a goal of furthering the company’s position in the driverless car trend.
In a press release on Monday, chipmaker Intel Corp announced that it will purchase Israeli driverless tech company Mobileye for a total of $15.3 billion or $63.54 per share in cash, with an enterprise value of $14.7 billion. Intel proposed to acquire the driverless tech company due to its leading computer vision expertise in developing autonomous programs from the cloud, enabling an easier access to driverless cars.
Upon the acquisition, Intel-Mobileye partnership will see a combined force of two of the best tech capabilities in the industry, having Intel’s high-performing computing and connectivity expertise and Mobileye’s advanced driverless technology.
“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,” said Intel CEO Brian Krzanich.
Intel has planned to enter the venture in manufacturing autonomous cars, and with Mobileye’s tech now included in Intel’s portfolio, the American company’s position in the driverless market will have more chances to be pushed higher. With Mobileye’s acquisition, Intel will be situated in a more leading position in line with tech companies who entered the autonomous business.
Meanwhile, upon Intel’s move in entering the driverless development venture, the tech company will be competing with fellow tech companies, NVIDIA Corp and Qualcomm Inc., which also began with their development of autonomous systems.
Although many investors expressed bull sentiments over Mobileye’s takeover, there are still some that worry over Intel’s sudden entry into the driverless development business. Several bear investors stated that there are still uncertainties whether auto and tech companies would be able to mass produce full-functioning driverless cars in the next four years.
Prior to Intel’s takeover bid, the tech company has not yet been directly involved in any self-driving car projects aside from several investments to some start-up companies that develop driverless systems.
Following the release of Intel’s buyout offer to Mobileye, Mobileye stock (NYSE: MBLY) experienced a sharp surge in the market. It climbed 28.24%, or $13.35 per share to $60.62 as analysts saw this move as a good strategy for the Israeli company.
Prior to Intel’s takeover bid, Mobileye stock has been trading around the $40 - $48 share price range since 2017.
However, Intel did not receive the same bullish sentiment from investors as its stock (NASDAQ: INTC) plunged 2.09% to $35.16 per share following the release of the news. Intel was among DJI’s worst performers on Monday, while the overall value of Dow Jones Industrial Average also decrease 21.50 points or 0.10% lower to 20,881.5 on Monday as most investors waited for the result of the Federal Reserve’s interest hike meeting that will begin on Tuesday until Wednesday.
Meanwhile, US stock markets generally experienced quiet trading on Monday as most investors await the Fed’s decision on its third interest rate hike. The American central bank will hold a two-day meeting regarding the matter and will immediately release the results of the meeting on Wednesday.
S&P 500 was up 0.87 points or 0.04% to 2,373.5, Nasdaq Composite Index climbed 14.06 or 0.24% to 5,875.8, and the New York Stock Exchange inclined 18.68 points or 0.16% to 11,519.4.
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