Tuesday, March 14, 2017

Intel Buys Mobileye As Self-Driving Vehicles Start To Accelerate

Besides the upcoming Federal Reserve rate hike everyone expects this week the big news has been Intel's(INTC) proposed $15 billion buyout of Mobileye(MBLY).  It looks like this past year big company's are starting to take note of the self driving space more as even Uber purchased self-driving truck startup Otto for $680 million.  Intel's offer for $63.54/share is a huge 34% premium to the closing price of $47.27.

Intel's move will allow it to sell more chips to the automotive industry which is getting extremely technological at every model and price point.  This only makes sense for them in my opinion as it will allow them to bundle the software and chips into all sorts of applications. With only a few more years until self-driving cars look to enter the mainstream no one wants to be left behind right now. 

Here is the performance of each company versus the S&P 500 since 7/28/14 until last Friday before the acquisition. Ironically if you were equal-weight shares in both companies you're return(w/o dividends) would be roughly 20.8%. Just barely beating the S&P's 19.93%.

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