Mobileye NV (NYSE:MBLY) is a company I’ve liked for a long time, and I’ve been pounding the table on it especially hard since January. It was a stock I wanted all of my subscribers to own, and owning it certainly paid off on Monday when it was announced that Intel Corporation (NASDAQ:INTC) would buy the company for a 34.5% premium over Friday’s closing price.
But that doesn’t make INTC stock any more attractive to me.
Intel will pay $63.54 a share, or about $15.3 billion, for Mobileye. The report came out first in an Israeli newspaper, then INTC made the formal announcement.
As you may recall, the two companies were already partners, joining forces with BMW last year to put 40 autonomous 7-Series sedans on the road by the end of 2017 to train them to drive in urban areas. The goal of the partnership is to have fully autonomous vehicles on the market by 2021.
Mobileye is a key player and innovation leader in the autonomous automobile industry — think driverless cars, driver assistance, collisions avoidance, etc. It’s in one of the hottest spaces in technology, and I’ve said for some time that it is an idea I believe will come to fruition much sooner than many expect.
The driverless car in particular is one of the real potential wow factors right now.
The acquisition is not only expected to accelerate innovation within the industry, but it’s also anticipated to position Intel as a leading player. On the press release, management said:
“The transaction extends Intel’s strategy to invest in data-intensive market opportunities that build on the company’s strength in computing and connectivity from the cloud, through the network, to the device.”
The deal is expected to close within the next nine months and should be immediately accretive to both Intel’s earnings and free cash flow.
INTC Stock Has Its Own Problems
Now, I don’t always like to toot my own horn, but this is a deal I have felt for a long time would eventually happen.
In fact, in August 2015 I said on my Fox Business Show, Making Money with Charles Payne, that I felt MBLY stock was worth hanging on to as I suspected it would be acquired one day. I’m glad I was right, because my Smart Portfolio subscribers locked in a 47% profit in two months.