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Massive Intel purchase of Mobileye held up as deadline extended

Deal delayed by month as companies await tax ruling and anti-trust clearance, spokesperson says; move likely not sign of danger to $15.3 billion agreement, according to expert

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

The Mobileye logo on a car in Jerusalem, March 14, 2017. (Yonatan Sindel/Flash90)
The Mobileye logo on a car in Jerusalem, March 14, 2017. (Yonatan Sindel/Flash90)

Israeli automotive technology firm Mobileye said Thursday that a deadline for Intel Corp. to acquire the firm’s shares, which was set to expire at the end of day New York time on June 21, has been delayed to July 20.

A spokesperson at Mobileye said the companies were still awaiting rulings from tax and anti-trust regulators, prompting the delay.

US giant Intel Corp. said in March that it agreed to buy Mobileye, a Jerusalem-based developer of advanced vision and driver assistance systems, for $15.3 billion, the largest ever purchase of an Israeli tech firm.

As part of the deal, Cyclops, a subsidiary of Intel, would put out a tender to acquire all of the issued and outstanding ordinary shares of Mobileye for $63.54 per share in cash. This tender was set to expire at 5 p.m. Eastern time on Wednesday.

A statement from Mobileye said the deadline had been extended to July 20.

Mobileye is apparently awaiting a nod from the Israeli Tax Authority to classify the deal in Israel as a share sale, which would exempt foreign investors from taxes, even if it is classified as an asset sale in The Netherlands where the company was incorporated.

In an asset deal in Israel, the transaction would be taxable.

“We are awaiting the Israeli tax ruling as well as a handful of antitrust clearances,” said Dan Galves, Mobileye’s chief communications officer. “Consistent with market practice, the offer was extended while we await receipt of these approvals before proceeding.”

He did not detail what antitrust permits the deal was awaiting. An Intel spokesman said he could not comment

The deal is still subject to regulatory permits including the receipt of regulatory approvals in certain non-US jurisdictions, and at least 95% of Mobileye’s outstanding shares being validly tendered and not withdrawn prior to the expiration of the tender offer, according to the Mobileye statement.

Galves pointed out that more than half the company’s shares had already been tendered.

According to the statement, approximately 50.31% of the outstanding Mobileye ordinary shares had been validly tendered following the tender offer, and an additional 7.76% of outstanding Mobileye ordinary shares have been tendered pursuant to guaranteed delivery procedures.

Yaniv Pagot, an economist and head of strategy for the Ayalon Group, an Israeli institutional investor, said the delay was not a sign the massive agreement could be sunk.

“I don’t believe this is an indication of any significant danger to the deal,” Pagot said by phone. “Companies set deadlines which are not always feasible because these processes take time.”

On June 13, shareholders held a meeting in Amsterdam where they approved the sale to Intel.

Mobileye develops sensors and artificial intelligence that allow a vehicle’s onboard computer to know where it is in relation to other vehicles, pedestrians and the surroundings, the key technologies needed for cars to eventually safely drive themselves.

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