Mobileye stock jumps on news of Intel purchase

Last Updated Mar 13, 2017 1:12 PM EDT

SANTA CLARA, Calif.— Intel (INTC) will buy Israel’s Mobileye (MBLY) in a deal valued up to $15 billion, the latest push by a major tech company to advance autonomous vehicles.

Mobileye develops technology that essentially gives computers a sense of their physical surroundings. It has also been busy creating ties to get that technology onto the road. Last year, it teamed up with Delphi Automotive to develop the building blocks for a fully autonomous car.

In the deal, announced early Monday, Intel Corp. will pay $63.54 for each share of Mobileye N.V., a 34 percent premium to its Friday closing price. The companies put the equity value of the deal at approximately $15.3 billion.

Shares of Mobileye soared Monday to close at $60.62, up 28 percent from their Friday close.

The combined global autonomous driving company, which includes Mobileye and Intel’s autonomous driving group, will be based in Israel and led by Mobileye Chairman and co-founder Amnon Shashua. The organization will support both companies’ existing production programs and build on relationships with automotive original equipment manufacturers, Tier-1 suppliers and semiconductor partners to develop advanced driving assist, highly autonomous and fully autonomous driving programs.

As a result of the acquisition, Intel will “be a one-stop-shop, offering hardware and software solutions for infotainment and automated driving applications,” said Akhilesh Kona, an analyst with IHS Markit, in a research note. The deal “represents a major change for the automotive supply chain and will put Intel in a prevailing position for the autonomous car market,” Kona wrote.

Intel CEO Brian Krzanich said in a press release that the companies’ joint efforts will “accelerate the future of autonomous driving with improved performance in a cloud-to-car solution at a lower cost for automakers.”

The deal was approved by the boards of both companies and is targeted to close within nine months.

Last year, ride-hailing company Uber Technologies and Volvo signed a $300 million deal for Volvo to provide SUVs to Uber for autonomous vehicle research. General Motors Co. invested $500 million in Uber rival Lyft Inc. to develop a fleet of autonomous electric taxis.

Google has a partnership with Fiat Chrysler to work on autonomous minivans, and Volkswagen is working with Uber competitor Gett. BMW, Intel and Mobileye also have a partnership, and Ford has invested $150 million in laser sensor maker Velodyne.