Intel Corp. (INTC Quick QuoteINTC - Free Report) has agreed to acquire Mobileye (MBLY Quick QuoteMBLY - Free Report) , a leading automotive vision technology company for $15.3 billion. This acquisition of Mobileye, an Israeli company making sensors and cameras for driverless vehicles, is one of the largest in the space as the technology is still in development.  It thus sets the stage for increased competition between Silicon Valley giants looking to dominate the self-driving car market (read: Semiconductor ETFs to Buy as Intel Tops Earnings, Guides Up).

 

Skeptics have questioned the acquisition price, which is about 21 times the expected 2017 revenues of Mobileye. Intel has not been a major player in this market, even though it has invested in multiple companies developing different systems for this segment of the automotive industry, from robotics to sensors. However, with the acquisition of Mobileye, Intel will gain exposure to a broad portfolio of systems including cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and data fusion and management as per Reuters. Intel plans to integrate its own automated driving operations with that of Mobileye. The combined firm will be run by the CTO and co-founder of Mobileye, Amnon Shashua (read: Intel Buys Mobileye: Are More Driverless Car Deals in the Future?).

 

Intel agreed to buy all issued and outstanding shares of Mobileye for $63.54 a share, a 34% premium to its closing price of $47 a share on March 10, 2017 and expects the deal to close in nine months. After the announcement, Mobileye’s shares rose to close at $60.62, a rise of 28.2%, while Intel was down 2.1% on March 13, 2017. 

 

Intel and Mobileye collaborated with BMW to test around 40 self driving cars earlier this year. These cars were equipped with the technologies of the two companies. They plan to get these cars on the road by the second half of 2017.

 

This is a major deal in the self-driving car sector. The space is keenly watched by most giant tech companies. This being one of the largest acquisitions of an Israeli Technology company, we will focus on ITEQ, with significant exposure to the technology sector in Israel.

 

BlueStar TA-BIGITech Israel Technology ETF (ITEQ Quick QuoteITEQ - Free Report)

 

ITEQ is relatively concentrated in its top 10 holdings with around 61% allocated to the same. Focused on the technology space in Israel, this fund is relatively expensive, with a fee of 75 bps a year. The fund manages AUM of $9.5 million.

 

This ETF has a 14.4% allocation to Mobileye and significantly impacted by any price movement of the same. Considering the 28.2% rise in the share price of Mobileye at market close on March 13, 2017, this fund seems to be a clear winner. ITEQ opened at $27.95 on March 13, 2017, up from Friday’s (March 10, 2017) close of $27.13. It closed at 28.15, up 3.76%. It returned 12.92% year to date and 21.72% over the past one year.

 

 

Even though the acquisition price seems to be a bit too heavy considering the revenue forecasts, the merged company can be a strong player in the self-driving cars market. Together, the companies expect to accelerate innovation. ITEQ seems to be gaining on the news, owing to the high exposure to Mobileye. 

 

 

 

 

 

Intel Corp. (INTC Quick QuoteINTC - Free Report) has agreed to acquire Mobileye, a leading automotive vision technology company for $15.3 billion. This acquisition of Mobileye, an Israeli company making sensors and cameras for driverless vehicles, is one of the largest in the space as the technology is still in development.  It thus sets the stage for increased competition between Silicon Valley giants looking to dominate the self-driving car market (read: Semiconductor ETFs to Buy as Intel Tops Earnings, Guides Up).

Skeptics have questioned the acquisition price, which is about 21 times the expected 2017 revenues of Mobileye. Intel has not been a major player in this market, even though it has invested in multiple companies developing different systems for this segment of the automotive industry, from robotics to sensors. However, with the acquisition of Mobileye, Intel will gain exposure to a broad portfolio of systems including cameras, sensor chips, in-car networking, roadway mapping, machine learning, cloud software and data fusion and management as per Reuters. Intel plans to integrate its own automated driving operations with that of Mobileye. The combined firm will be run by the CTO and co-founder of Mobileye, Amnon Shashua (read: Intel Buys Mobileye: Are More Driverless Car Deals in the Future?).

Intel agreed to buy all issued and outstanding shares of Mobileye for $63.54 a share, a 34% premium to its closing price of $47 a share on March 10, 2017 and expects the deal to close in nine months. After the announcement, Mobileye’s shares rose to close at $60.62, a rise of 28.2%, while Intel was down 2.1% on March 13, 2017. 

Intel and Mobileye collaborated with BMW to test around 40 self driving cars earlier this year. These cars were equipped with the technologies of the two companies. They plan to get these cars on the road by the second half of 2017.

This is a major deal in the self-driving car sector. The space is keenly watched by most giant tech companies. This being one of the largest acquisitions of an Israeli Technology company, we will focus on ITEQ, with significant exposure to the technology sector in Israel.

BlueStar TA-BIGITech Israel Technology ETF (ITEQ Quick QuoteITEQ - Free Report)

ITEQ is relatively concentrated in its top 10 holdings with around 61% allocated to the same. Focused on the technology space in Israel, this fund is relatively expensive, with a fee of 75 bps a year. The fund manages AUM of $9.5 million.

This ETF has a 14.4% allocation to Mobileye and significantly impacted by any price movement of the same. Considering the 28.2% rise in the share price of Mobileye at market close on March 13, 2017, this fund seems to be a clear winner. ITEQ opened at $27.95 on March 13, 2017, up from Friday’s (March 10, 2017) close of $27.13. It closed at 28.15, up 3.76%. It returned 12.92% year to date and 21.72% over the past one year.

 Bottom Line

Even though the acquisition price seems to be a bit too heavy considering the revenue forecasts, the merged company can be a strong player in the self-driving cars market. Together, the companies expect to accelerate innovation. ITEQ seems to be gaining on the news, owing to the high exposure to Mobileye. 

 

 

 

 

 

Want key ETF info delivered straight to your inbox?

 

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>