Silicon Valley is deepening its bet that cars will increasingly morph into computers on wheels.
Intel Corp. on Monday said it struck a deal to buy Mobileye NV for about $15.3 billion, the latest investment by a technology company in the future of self-driving cars.
The deal values Mobileye at $63.54 a share, a 34% premium to its closing price Friday. Mobileye shares rose 31% to $61.77 in premarket trading, while Intel shares fell 1.1% to $35.51.
Mobileye makes chip-based camera systems that power semi-automated driving features that are already being used in cars today and is working to put that technology in the center of self-driving cars of the future.
The deal “merges the intelligent eyes of the autonomous car with the intelligent brain that actually drives the car,” Intel Chief Executive Brian Krzanich said in a note to employees. “The saying ‘what’s under the hood’ will increasingly refer to computing, not horsepower.”
The two companies already have ties. Intel, Mobileye and BMW AG, have a partnership to put about 40 self-driving cars on the road in test mode.
The deal for Jerusalem-based Mobileye is also a win for Israel’s tech scene, representing one of the largest Israeli deals to date.
Auto makers and tech companies including Alphabet Inc., Uber Technologies Inc. and Tesla Inc. are racing to develop autonomous technology.
General Motors Co. last year spent $1 billion to acquire Cruise Automation to expedite its self-driving program. Uber bought self-driving truck maker Otto for $680 million in August. Alphabet, Google’s parent, recently sued Uber for allegedly stealing trade secrets related to that deal.
In January, Intel said it would buy a 15% stake in digital mapmaker Here International B.V., joining with its other core shareholders, BMW, Daimler AG and Volkswagen AG’s Audi unit, to develop navigation technology for self-driving cars.
Intel and Mobileye said the deal provides Intel with closer relationships to suppliers and car makers. Last week, Samsung Electronics Co. completed its $8 billion deal to buy Harman International Industries Inc. in its own move into the automotive space.
In a memo to employees, Mobileye executives said Intel’s existing automated-driving efforts will be integrated into the company, based in Israel and run by its existing leaders.
The transaction will add to Intel’s adjusted per-share earnings and is expected to close in the next nine months.
Intel, which provides many of the chips used in desktop computing, has worked in recent years to try to predict and stay ahead of the next emerging technology after largely missing the smartphone market. A common challenge in the technology business is that companies that lead one generation of computing often struggle in the next. Intel last year said it would slash 11% of its workforce to cut costs and to free up money to invest in businesses that are growing.
Intel stumbled when it bought security-software specialist McAfee Inc. for $7.7 billion in 2011. Last fall, it agreed to sell a majority stake in that unit to private-equity firm TPG, in a deal that valued it at $4.2 billion including debt. Intel executives had talked up the possibility of using expertise from McAfee to build more security features into chips.
Intel’s acquisition of Mobileye dwarfs recent deals among auto makers, reflecting the widespread view that the auto-supply base is where future value is expected to be generated. Many suppliers have a narrow product focus and don’t carry the same amount of overhead related to factories or the cost of meeting emissions and safety regulation.
General Motors earlier this month agreed to sell its Adam Opel AG unit for $2.2 billion and had to take responsibility for billions of dollars in liabilities to convince France’s Peugeot SA to take it, for instance. Opel sells more than 1 million cars a year in Europe.
Nissan Motor Co., which has an alliance Renault SA, last year bought a controlling stake in Mitsubishi Motors Corp. for $2.3 billion.
Mobileye has supply and tech-sharing agreements with several auto makers and other auto suppliers, including Delphi Automotive. The company became more prominent earlier in the decade when Tesla started using Mobileye’s gear for its advanced semiautonomous safety gear, but the two companies parted ways last year after a fatal crash of a Tesla that had been running on the electric-vehicle maker’s Autopilot system.
John D. Stoll contributed to this article
Write to Austen Hufford at email@example.com
Intel to buy Mobileye for $15.3 billion – MarketWatch