Intel, one of the world’s biggest technology conglomerates has confirmed reports on Monday that it has agreed to purchase Mobileye for between $14-15 billion. This would be the biggest sale in the history of Israeli hi-tech. The biggest sales of Israeli companies until now were NDS, acquired by Cisco for $5 billion, and Chromatis, acquired by Lucent for $4.5 billion.
The US computer chip giant released a statement to the media about the unprecedented acquisition of Mobileye in which they said: "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 estimates the vehicle systems, data and services market opportunity to be up to $70 billion by 2030."
Intel Corp. will pay $63.54 for each share of Mobileye N.V., a 34 percent premium to its Friday closing price. 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 NV's stock closed Monday up 28 percent to $60.62. Intel shares fell 2 percent to $35.16.
Mobileye, a Jerusalem-based company was founded in 1999 by Prof. Amnon Shashua, of the Hebrew University, and Ziv Aviram. Shashua is the company’s CTO, Aviram, who has a business background, is the CEO.
Mobileye describes itself as the "global leader in the development of computer vision and machine learning, data analysis, localization and mapping for Advanced Driver Assistance Systems and autonomous driving."
The company develops driver assistance systems and is considered one of the leading developers of automated car technology. The company’s technologies are used by many of the world’s leading automobile manufacturers, as they look for ways to effectively complete with Google, Apple and Telsa, all of which are developing autonomous vehicle technologies.
The company's worth has been estimated at $10.5 billion, up 85 percent from when it went public in July 2016. Mobileye's $890 million IPO made it the largest Israeli public offering in the United States
Last July Intel, the BMW Group and Mobileye announced they were creating a joint autonomous vehicle task force to bring solutions for highly and fully automated driving into full-scale production by 2021. BMW announced in January of this year that it would deploy 40 self-driving vehicles for tests in the United States and Europe.
AP reported that the Mobileye deal will help put Intel in the driver's seat in terms of supplying vital parts of autonomous vehicles, said IHS Markit analyst Akhilesh Kona. Besides Mobileye's technology, Intel is gaining access to major automakers and parts suppliers, Kona said. "They have captured a piece of what should be a fast-growing market."
Intel and Mobileye are targeting an array of sensors and camera systems that are expected to generate annual sales of $10 billion by 2022, quintupling from about $2 billion this year, IHS estimated. Mobileye controls about 70 percent of the world market for driver assistance systems such as automatic braking, lane centering and pedestrian detection. IHS expects as many as 21 million autonomous vehicles to be sold by the year 2035.
But there are still a number of obstacles to overcome. Companies still haven't aren't certain how the cars will drive in snow or other bad weather, and it will be difficult for cars to be programmed to handle numerous local traffic customs. Also, no one really knows yet when the cars will be safe enough to remove human backup drivers.
The rise of mobile devices caused a decline in the personal computer market and undercut Intel's growth and influence in the technology business. Now Intel is expanding into other potentially fertile fields.
Besides setting its sights on the still-nascent driverless car market, Intel also has been investing in wearable computers, such as smartwatches, as well as drones.
Alon Atsmon, one of Israel’s most successful hi-tech entrepreneurs, said that the industry was not surprised by this development. “They have been talking about this for over a year, ever since Qualcomm acquired NXP, and Samsung’s recent acquisition of Harman (an $8 billion deal-YA). This acquisition is Intel’s best and most effective option for creating a viable presence in the autonomous vehicle market, which is where the future of the automobile industry lies.”
Atsmon founded iONRoad, which was acquired by Harman almost four years ago. The companies have never disclosed the amount Harman paid for the company. Atsmon, who served for over three years as Harman’s VP responsible for its strategic technology development, has refused to provide any information as to what he received for the company.
A senior and highly regarded Israeli technology entrepreneur, with a highly successful track record in a broad range of technology development, said, exclusively to TPS, that while the acquisition was an excellent development for Mobileye, he is not sure whether the same can be said for Intel.” “Intel has been unsuccessfully trying to enter this market for over three years, and decided to acquire Mobileye, despite the fact that recent deep learning developments could potentially negatively impact Mobileye, making its technology less cutting edge.”
On Tuesday, CEO Ziv Aviram met with Transportation Minister Yisrael Katz, Yediot Ahronot reported.
"When we established Mobileye, we had an absurd little dream, to fight against the traffic accidents which claim the lives of a million and a half people each year," Aviram said during his meeting with Katz.
Now that Mobileye is part of "the giant machine of Intel, we will establish the largest center for autonomous cars right here in Israel. We will be an example to the world. We are very excited about the transaction and it is very important for us. I would like to thank the media for their positive coverage and well-wishes for us."
Yaniv Garty, the General Manager of Intel Israel, said: "All of Intel's global operations in this field will be managed from Israel. This is a vote of confidence both in the company and in Israeli regulations. It will take more time to close the deal."
In August, Mobileye and UK-based auto-equipment maker Delphi said they were teaming up to develop an autonomous driving system which would be ready for vehicle-makers in 2019.
Mobileye, which also develops systems for accident avoidance, has concluded an agreement with Volkswagen on road data technology as well.
Science, Technology and Space Minister Ofir Akunis (Likud) said, "Israel is a powerhouse of knowledge, technology, and innovation.
"The fact that these international giants see potential in Israel and are always looking to buy successful companies in their field, is a source of pride for Israel. This shows how strong Israel's technology industry is.
"I am sure we will continue to be a pioneering country, which the countries of the world look at and admire," he said.
By: Yoni Ariel
(TPS, INN & AP)