Income · Stocks to Consider and Updates

Intel to Acquire Mobileye

  Israeli-based Mobileye NV, a developer of computer vision and mapping for driver assistance systems and autonomous driving technologies, has agreed to be acquired by chipmaker Intel Corp. (NASDAQ: INTC – $35.23) in a deal valued at $15.3 billion. Intel will acquire all the outstanding shares of Mobileye for $63.54 per share in cash. The move is expected to accelerate innovation for the automotive industry and positions Intel as a leader in the fast-growing market for autonomous vehicles. Intel plans to finance the transaction with cash from its balance sheet and the deal is expected to be accretive to Intel’s earnings and free cash flow immediately. Mobileye is expected to have sales of $500 million this year and earn about $1.05 per share. The transaction is slated to close within the next nine months and has already been approved by the boards of directors of both companies, although it is still subject to the receipt of regulatory approvals and other closing conditions. The two companies already have ties. Intel, Mobileye and BMW have a partnership to put about 40 self-driving cars on the road in test mode.

       Intel has been aggressively trying to break away from its bread-and-butter PC business over the past few years with acquisitions and partnerships. In January, Intel said it would buy a 15% stake in digital mapmaker Here International joining with its other core shareholders, BMW, Daimler and Volkswagen’s Audi unit, to develop navigation technology for self-driving cars. At the end of 2015, INTC completed its acquisition of Altera, which has a strong semiconductor presence in data centers. The shares of Intel, yielding 2.9% can continue to be held in a well-diversified income portfolio.

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