Today, chipmaker Intel announced its intention to purchase Mobileye in a deal worth approximately $15.3 billion scheduled to close in about nine months. This offer values Mobileye at $63.54 per share, a 34% premium to its closing price last Friday.
Mobileye, headquartered in Israel, is the leading manufacturer of chip-based camera systems used in cars for semi-automated driving features. Intel has struggled to break into new chip related niches and it was clearly behind the competition in the accelerating race that is developing in car automation. Intel’s need to catch up explains what seems to be a generous mark-up for Mobileye shareholders.
We will not complain about the size of the premium since Mobileye is one of our holdings in the THALASSA’s IoT portfolio. Mobileye was indeed included in the portfolio on these two assumptions: its leadership position and its high likelihood that it would have been acquired.
This new acquisition is the forth one in our IoT portfolio following the take-overs of Arm Holdings, Invensense and NXP Semiconductors. This series of acquisitions validates our strategy that sees the Internet of Things trend accelerating and therefore forcing consolidation and aggressive re-positioning by the majors.
In the specific space of car automation, there is a lot of activity above and below the surface. What makes the sector appealing to major players is the ramifications of applications, from the obvious transformation of the transportation framework to the massive amount of data that these sensors will be able to download and that can be potentially processed and monetized in a variety of ways.
Among the major players we note Google, Uber, General Motors (via its acquisition of Cruise Automation) and Tesla at the forefront of this race in autonomous technology.
We continue to expect more activity in the IoT space and we will continue to actively search for additional opportunities to add to our portfolio.