SAN JOSE, Calif. -- Intel is buying Mobileye for about $15.3 billion as the race for self-driving car technology heats up.
The Santa Clara-based computer microchip maker said Monday that it will pay $63.54 a share in cash for the Jerusalem-based maker of camera systems for autonomous vehicles. That's a 34 percent premium on the closing price of Mobileye shares Friday.
Intel Chief Executive Officer Brian Krzanich said in a message to employees that "this acquisition essentially merges the intelligent eyes of the autonomous car with the intelligent brain that actually drives the car.
"I truly believe we are better together," Krzanich said.
"The transaction is unique in the sense that instead of Mobileye being integrated into Intel, Intel's Automated Driving Group (ADG) will be integrated into Mobileye," Mobileye CEO Ziv Averam said in a letter to employees. He also said he and Chief Technology Officer Amnon Shashua will be "running Mobileye just as we have done in the past."
The two companies are no strangers to each other's technology. Last summer, they announced a partnership with BMW to create a platform for self-driving cars.
Also last year, Mobileye said it would not be renewing its contract with Tesla after a fatal crash in a Model S soured their relationship. Amid safety concerns about Tesla's Autopilot technology, the two companies engaged in public finger-pointing. At the time, Mobileye insisted that it had more going for it than its relationship with Tesla.
Intel had already invested in self-driving technology this year. In January, the company announced it bought a 15 percent stake in Here, a provider of mapping data and services that's co-owned by German automakers Audi, BMW and Daimler.
Other Silicon Valley tech companies that are in the self-driving vehicle race include Google parent Alphabet, Tesla and Uber.
Intel sees its role in the space as data-driven.
"Our strategy is to make Intel the driving force of the data revolution across every technology and every industry," Krzanich said in his letter to employees.
The acquisition is expected to close by the end of the year.
Intel estimates the market for vehicle systems, data and services will be worth as much as $70 billion by 2030.
"They're paying a huge premium in order to catch up, to get into the front of the line, rather than attempt to build from scratch," said Mike Ramsey, an analyst with technology researcher Gartner.
The deal is the third most expensive acquisition in the technology industry this century, based on transactions over $5 billion and Mobileye's trailing 12 month earnings, before interest, tax, depreciation and amortization.
Mobileye was founded in 1999 by Shashua and Aviram and made its name with systems that alert drivers to pedestrians, unintended lane departures and speed limit violations. The technology, which can also trigger braking to prevent an accident, counts General Motors Co. among its customers. Recently, Mobileye has been pushing to sign up more carmakers for its advanced products, such as technology that collects data from vehicle fleets to build a real-time, crowd-sourced mapping service. Goldman Sachs Group Inc. invested $100 million in 2007 for a minority stake in Mobileye.
Intel's purchase is a shot at rival Qualcomm. The mobile phone chipmaker is in the process of making itself the world's biggest producer of chips used by the automotive industry through its $47 billion acquisition of NXP Semiconductors NV.
"Intel are so far behind in this space the only way they could catch up was via an acquisition," said Neil Campling, head of technology research at Northern Trust Securities.
Information for this article was contributed by Levi Sumagaysay of The Mercury News and Ian King and Gabrielle Coppola of Bloomberg News.
Business on 03/14/2017