Tim Mueller’s Transaction Analysis: New IT M&A Deals March 14

Intel to Acquire Mobileye

Financial Information

  • Enterprise Value: $13.69 billion
  • EV/LTM Revenue: 38.2x
  • EV/LTM EBITDA: 109.5x

Transaction Facts

  • Intel Corporation (Nasdaq: INTC) announced today an agreement to acquire Mobileye (NYSE: MBLY), a technology supplier for autonomous vehicles.
  • Intel will pay $63.54 in cash for each share of Mobileye, which represents a 34.5% premium over the stock’s Friday closing price. The deal is expected to be immediately accretive to non-GAAP earnings and free cash flow.
  • Following the close of the transaction, Intel plans to relocate its automotive unit to Mobileye’s headquarters in Israel, joining 10,000 Intel employees already stationed.
  • In 2016, Mobileye generated $358 million in revenue and $108 million in net income.

Merging Lanes to Go Faster

Growth Carries A Premium: This represents the biggest-ever purchase of an Israeli tech company — 30x Mobileye’s 2017 revenue and 124x its operating profit. It is a continuation of an ongoing trend of accelerating growth in the self-driving sector, driven by consolidation among hardware and software technology providers.

Making It Official: With the purchase, Intel positions itself to fortify relationships with current partners and solidify its presence in the fast-growing autonomous vehicle market segment. The two companies have worked together in the past and are partners in multiple ongoing initiatives

Taking the Wheel: Intel seeks to tap into the market related to autonomous driving needs, which it estimates to be at $40 billion by 2030, and find an edge against its main competitor, Nvidia (Nasdaq: NVDA), whose patented GPU technology rivals Mobileye’s EyeQ product. Mobileye is developing production-ready Fully Autonomous Vehicles with BMW, and has deals with 27 major automakers.

Falling in Line: This deal draws parallels to several 2016 acquisitions of car technology providers, including GM’s purchase of Cruise Automation and Uber’s acquisition of Otto (for $690 million and $680 million, respectively). The deal is also reminiscent of Samsung Electronics’ $8.0 billion purchase of HARMAN, a connected car solutions provider, completed Saturday.

Big Deal: Intel often breaks out its pocketbook when it senses the opportunity to secure a competitive advantage. This is its second largest transaction of all time, following its $16.8 billion acquisition of semiconductor manufacturer Altera in 2015 and coming before its $7.7 billion acquisition of McAfee in 2010.

To receive instant analysis on the day’s business news from Tim Mueller, contact [email protected]. Check out a list of diverse assets for sale on SBN’s IT M&A Marketplace powered by IT ExchangeNet here.

IT ExchangeNet is the industry-leading marketplace for matching buyers with sellers of mid-market IT businesses. Founded in 1998 by technology CEOs and M&A professionals, IT ExchangeNet is an efficient marketplace for owners of mid-market IT businesses seeking buyers or strategic partners. ExchangeNet follows a disciplined and highly targeted process, bringing buyers and sellers together to close deals with transaction values of less than $25 million.