The Israeli technology industry is used to record-making mega deals, but that has not stopped a buzz of excitement in the country’s tech sector in the wake of Intel’s $US15.16 billion takeover of Mobileye.
There are several universal lessons from the takeover of this Jerusalem-based software company, which develops visual information processing applications for driver assistance systems.
According to Tel Aviv-based tech investor Ben Weiss the first lesson is that there is no such thing as an overnight success.
Mobileye was founded 18 years ago. It took 15 years to go from private hands to publicly listed company. Its initial public offering was in 2014.
“Mobileye has been record-setting in many aspects, including the power of patience and persistence as the market woke up to the big opportunity and use case for its technology,” Weiss says.
The second lesson is that equity is a brilliant tool for motivating staff in tech companies.
There were reports on Tuesday that the Mobileye transaction had generated the largest takeover premium paid in any M&A deal this century. That is hard to believe given Dealogic said the premium to the one-month share price was 39.71 per cent.
However, Nomura analysts said the premium to the three-month share price was 51 per cent, which is less than the 55 per cent premium paid for Altera by Intel in 2015.
Either way, Intel is paying a huge price to gain market leadership in autonomous driving. Using Intel’s takeover price of $US63.54 a share, Mobileye is valued at 41 times its earnings.
Read the full article by Tony Boyd in The Australian Financial Review.