Please ensure Javascript is enabled for purposes of website accessibility

Why Mobileye N.V. Stock Skyrocketed 34.5% in March

By Steve Symington - Apr 11, 2017 at 7:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The auto-driving vehicle technology company is being acquired. Here's what investors need to know.

What happened

Shares of Mobileye N.V. (MBLY) jumped 34.5% in the month of March, according to data provided by S&P Global Market Intelligence, after the company agreed to be acquired by Intel (INTC -0.79%).

So what

More specifically, on March 13, 2017, Mobileye revealed it had entered a definitive agreement under which Intel will acquire all of its outstanding issued and ordinary shares for $63.54 per share in cash -- a more than 34% premium to Mobileye's closing price the day before the announcement. That also represented an equity value of roughly $15.3 billion and an enterprise value of $14.7 billion.

Mobileye, Intel, and BMW team up on autonomous driving.

IMAGE SOURCE: INTEL.

"The combination is expected to accelerate innovation for the automotive industry and position Intel as a leading technology provider in the fast-growing market for highly and fully autonomous vehicles," the companies stated at the time. "Intel estimates the vehicle systems, data and services market opportunity to be up to $70 billion by 2030."

Now what

Of course, 2030 is a long way off. But in the meantime, Intel anticipates the acquisition to be accretive to its adjusted earnings per share and free cash flow immediately after the deal's expected close within the next eight months or so -- that is, assuming the transaction receives the necessary shareholder and regulatory approvals between now and then.

With shares of Mobileye currently trading at less than 3% below the agreed acquisition price -- and assuming waiting to sell won't result in more favorable long-term capital gains tax treatment -- I think investors would do well to take their profits off the table and put them to work elsewhere.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Intel Corporation Stock Quote
Intel Corporation
INTC
$41.67 (-0.79%) $0.33
Mobileye N.V. Stock Quote
Mobileye N.V.
MBLY

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.