Mobileye (MBLY 63.00, +15.73) has surged 33.3% in pre-market after agreeing to be acquired by Intel (INTC 35.31, -0.60) for $63.54 per share or $15.30 billion in cash.
Mobileye specializes in collision avoidance systems, which are slowly turning into autonomous driving systems with each upgrade cycle. The company had collaborated with Tesla (TSLA 244.10, +0.41) in the past, but the partnership ended in the third quarter of last year after Mobileye expressed safety concerns regarding Tesla's use of its ‘autopilot' feature. Shortly after ending its relationship with Mobileye, Tesla chose NVIDIA's (NVDA 97.45, -1.67) Drive PX 2 AI platform to power autonomous driving features in its vehicles.
Although Mobileye terminated its relationship with Tesla, the company is working with other automakers like BMW and Volkswagen. Furthermore, Mobileye has already engaged in a partnership with Intel and Delphi, and today's deal announcement suggests that partnership has been beneficial to both companies. With Mobileye joining Intel, the world's most established chipmaker is now in better position to build systems that will challenge NVIDIA's Drive PX 2 platform.
Intel estimates that the market for vehicle systems, data, and services will reach $70 billion by 2030. The transaction, which carries a 34.4% premium to Mobileye's share price from Friday, is expected to be accretive to non-GAAP earnings and free cash flow immediately. The deal will be funded with cash and closing is expected within the next nine months.