Intel Plans Mobileye Public Listing – Report

Intel (INTC) plans to take its car unit, Mobileye, public, as early as mid-next year. Reuters reports, citing sources familiar with the matter, that the unit could go public in a deal that values it at more than $50 billion. INTC shares rose 3.53% to close at $50.99 on December 6.

Intel is a U.S. company that designs, manufactures, and sells microprocessors, chipsets, and flash memory. It also operates a data-centric business that includes Data Center Group (DCG) and Internet of Things (IOTG).

Mobileye Listing

In addition, Intel intends to retain the Mobileye executive team once it goes public. It also wants to maintain majority ownership after the initial public offering, with no plans divests or spin-off majority ownership. The chip giant will also continue to provide technical resources to the automaker, which currently employees nearly 14,000 workers in Israel.

The strategic partnership has allowed Mobileye to enhance autonomous vehicle development, using the free cash flow it continues to get. Nevertheless, going public is expected to provide the best opportunity to allow the autonomous car company to build its track record on innovation and generate shareholder value.

Intel acquired Mobileye in 2017 in a deal that valued Mobileye at $15.3 billion. With the acquisition, the company strengthened its edge in the push to compete against Nvidia (NVDA) and Qualcomm Inc. (QCOM) in the development of self-driving systems.

The push to take Mobileye public comes on Intel’s Chief Executive Officer Pat Gelsinger coming under immense pressure from activist investors to consider spinning off costly chip manufacturing operations. In contrast, the chip giant is looking to enhance its manufacturing capacity to address the global semiconductor shortage worldwide.

Stock Rating

Last month, Citigroup analyst Christopher Danely reiterated a Hold rating on the stock. According to the analyst, weakness in PC demand could persist after two straight years of double-digit growth.

Consensus among analysts is a Hold based on 4 Buys, 12 Holds, and 6 Sells. The average Intel price target of $53.90 implies a 5.71% upside potential to current levels.

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