Intel, the US chipmaker, will pay more than $15bn to buy Mobileye, the maker of autonomous driving technology, in an attempt to take a leading position in the self-driving car market.
In Israel’s biggest-ever corporate acquisition, Intel said it would buy New York-listed Mobileye’s shares for $63.54 each in cash, representing an equity value of some $15.3bn and an enterprise value of $14.7bn. Shares in the group were almost a third higher in pre-market trading on Monday at $61.5.
The deal is the largest yet in the market to provide the technology behind self-driving cars, which is being fought over by a number of groups such as to Alphabet’s Waymo, Tesla, Uber as well as various carmakers.
Mobileye makes vision-based safety systems for cars based on its own algorithms, which can detect pedestrians, vehicles and traffic signs and help enable autonomous driving.
Intel and Mobileye said that the deal would “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 estimates the self driving car market will be worth up to $70bn by 2030.
Mobileye was co-founded in 1999 by Amnon Shashua, a professor of computer science at Hebrew University, and Ziv Amiram, who is now the group’s chief executive. The company, which is headquartered in Jerusalem and employs over 600 people, supplies a number of global carmakers.
In January, Mobileye announced a partnership with Intel and BMW to put a fleet of 40 autonomous test vehicles fitted with its autonomous safety systems on the road by the second half of 2017.
Intel is Israel’s largest high-tech employer, with 10,000 people on its payroll and plans to invest $6bn in the country.
Mr Amiram said that by pooling infrastructure and resources, the two companies could combine know-how in mapping, virtual driving, simulators and other areas relating to autonomous driving technology. “Together, we will provide an attractive value proposition for the automotive industry,” Mr Amiram said.
The two companies confirmed their plans after a report of the deal in Israel’s The Marker earlier on Monday.
Intel said it would fund the acquisition with cash from its balance sheet. The US company had nearly $14bn of its cash overseas at the start of 2016. If it decides to pay for the deal with that cash, it would mark the second major takeover this year to have been funded by money held overseas by US groups. In January, J&J proposed a $30bn takeover of Swiss drugmaker Actelion using overseas funds.
The deals signal that some large US-based multinationals are not waiting for president Donald Trump to reform the country's tax code, which may include a one-time special tax repatriation rate to bring money back to the US.
The deal would be the biggest by a foreign company of an Israeli group in the Jewish state’s 69-year history, with many recent transactions of notable size also featuring companies in Israel’s booming high-tech sector.
The largest foreign acquisition in Israel so far was Cisco’s $5bn purchase of NDS, a software company, in 2012. In 2013, Google bought Waze, the Israeli navigation app, for $1.2bn.
Israeli officials said that it represented a high-water mark for the high-tech sector as Mobileye — unlike smaller tech companies that sold to foreign investors earlier in their development — was a fully-developed international operation with a recognised brand name.
“Israeli companies being acquired by high-tech giants is no big news, but what this transaction represents is a company being acquired as a large, mature concern, and a leader in its space,” said Avi Hasson, Israel’s chief scientist and chairman of the Israel Innovation Authority, a state funding and technology research body. “It would have been hard to imagine such a deal happening ten years ago.”
Intel and Mobileye said that their combined global autonomous driving business would remain headquartered in Israel, and headed by Mr Shashua.
Israel is becoming a hub for automakers capitalising on the emerging importance of machine learning, artificial intelligence and other high-tech functions in a new generation of cars.
The two companies said that they expected the deal to close within nine months, and will need to be approved at a meeting of Mobileye’s shareholders.
