In the biggest deal to ever hit Israel’s hi-tech industry, US chip giant Intel will be buying Jerusalem’s autonomous driving company Mobileye for about $15 billion.
The firms announced a definitive agreement on Monday for Intel to acquire Mobileye, a global leader in the development of computer vision and machine learning for advanced driver assistance systems and autonomous driving. According to the agreement, an Intel subsidiary will launch a tender to acquire all of the outstanding ordinary shares of Mobileye for $63.54 per share in cash, amounting to an equity value of about $15.3b. and an enterprise value of $14.7b.
Although Intel is acquiring Mobileye, the companies have decided to headquarter their future autonomous driving operations at Mobileye’s Jerusalem base, led by Amnon Shashua, the company’s co-founder, chairman and CTO.
“If you combine the two assets together, you get a very, very powerful proposition,” Shashua said in a joint conference call with investors on Monday afternoon. “In addition to our core skill sets, Intel has assets in mapping and infrastructure, assets in data centers, in artificial intelligence, in machine learning.
“If you put all of that together, you really get an end-to-end solution for autonomous driving,” he added.
By integrating Intel’s high-performance computing and connectivity expertise with Mobileye’s computer vision technologies, the chip giant is hoping to position itself as a leading technology provider for highly and fully autonomous vehicles, according to a joint statement from the companies. Intel estimated that the market opportunity for vehicle systems, data and services will grow to $70b. by 2030.
“This acquisition is a great step forward for our shareholders, the automotive industry and consumers,” said Brian Krzanich, Intel’s CEO. “Intel provides critical foundational technologies for autonomous driving, including plotting the car’s path and making realtime 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.”
While the transaction isn’t expected to close for another nine months, the companies said that their boards of directors have already approved the acquisition.
“We expect the growth toward autonomous driving to be transformative,” said Ziv Aviram, Mobileye’s co-founder, president and CEO. “It will provide consumers with safer, more flexible and less costly transportation options, and provide incremental business model opportunities for our automaker customers.”
Once the acquisition officially occurs, the companies have decided to headquarter their combined global autonomous driving organization in Israel, and will combine Mobileye and Intel’s Automated Driving Group.
The organization will support existing production programs and build upon relationships with automotive original equipment manufacturers, suppliers and semiconductor partners, the companies said.
Keeping the operations in Israel, at Mobileye’s Jerusalem offices, was critical to Intel when cementing the deal, Krzanich said during the Monday afternoon conference call. Stressing how solid Intel’s presence in Israel is already, Krzanich added that he and Shashua have built a very strong relationship and that the larger corporation understands Israeli culture.
Krzanich described how the deal “puts together the whole package” that is essential for integrating all of the hardware and software technologies that contribute to autonomous driving systems.
“Together we expect to be the global leader in autonomous driving,” he said. “It really allows us to provide the complete solution.”
Intel and Mobileye already had a collaborative working relationship prior to the acquisition announcement, as the two companies teamed up with BMW in July 2016 with a goal of bringing fully autonomous vehicles to the streets by 2021.
Founded by Aviram and Shashua in 1999, Mobileye is best known for inventing a technology to alert drivers to road dangers. Using that proprietary obstacle-sensing sensor system to gather millions of kilometers of driving data, Mobileye is working with many of the world’s biggest auto manufacturers to pave the way for self-driving cars and trucks.
In August 2014, the company went public on the New York Stock Exchange, raising $890 million in the largest Israeli IPO in the United States. At the 2016 Jerusalem Post Annual Conference in New York, Mobileye was awarded an Innovation Prize.
“We still like to call ourselves a start-up, but we are a global, international company, operating and doing R&D in Israel, supplying a huge industry and growing,” Aviram told The Jerusalem Post
in an interview last year.
“Autonomous cars are not a dream anymore.It’s not a matter of if. It’s matter of when,” he said.
Following Monday’s announcement, Prime Minister Benjamin Netanyahu phoned Aviram to congratulate the company on the agreement. During the call, Aviram informed the prime minister that Mobileye would be setting up the global development center in Israel and taking responsibility for all international operations in the autonomous vehicle sector for Intel.
“The deal dramatically proves that the vision which we are leading is being realized,” Netanyahu said. “Israel is becoming a global technology center, not just in cyber [technology] but in the automotive sector as well.”
Yossi Vardi, a founding father of Israel’s hi-tech industry, expressed his satisfaction in an interview with the Israel Project following Monday’s announcement, stressing that “the size and the magnitude of the deal is stunning.”
The choice Intel, the leading semiconductor maker in the world, made to acquire Mobileye is an endorsement of the high quality of Israeli hi-tech, he explained.
“Intel is a long-time player in Israel and I am sure, like in many cases in the past, that this will be a very important impetus to create the whole industry related to autonomous and connected vehicles,” Vardi said.
Veteran entrepreneur MK Erel Margalit (Zionist Union), who founded Jerusalem Venture Partners before entering politics, described the agreement as “a new peak for Israeli hi-tech.”
“Mobileye is a Jerusalemite company that came out of the computer vision department of the Hebrew University, which proves that Israeli hi-tech can break all boundaries,” Margalit said. “I have no doubt that this deal will push many young people in Israel to seek out and climb to the next summit in Israeli hi-tech.”
Science and Technology Minister Ophir Akunis likewise spoke about the deal as proof of Israel’s technological capabilities. Large international companies are “constantly searching” for successful start-ups in Israel to purchase – a source of “Israeli pride in the technological strengthening of the country,” he said.
“I am confident that we will continue be a trailblazing nation that other countries of the world will look at with respect and amazement,” Akunis added.Niv Elis and Jerusalem Post staff contributed to this report.