Intel declares no plans to divest Mobileye majority stake

Advanced Driving Assistance Systems (ADAS) Stock Price Mobily International Company Intel (NASDAQ: MBLY) shares rose 8% in premarket trading after Intel Corp. (NASDAQ: INTC) said it has no plans to sell its majority stake in the Israeli company.

“As the majority shareholder of Mobileye, Intel remains focused on creating value and is excited about the future of its business. We currently have no plans to divest a majority stake in the company. By providing Mobileye with separation and independence, we have enhanced its ability to capitalize on growth opportunities and accelerate its path to greater value creation. We believe in the future of autonomous driving technology and Mobileye’s unique role as a leader in the development and deployment of advanced driver assistance systems,” Intel said.

In recent weeks, reports have emerged ahead of a key Intel board meeting about the chipmaker’s plans to reduce its stakes in subsidiaries such as Mobileye and Altera. One report more than a week ago sent Mobileye’s stock price sharply lower, down 15% since the start of the month.

Since the start of 2024, Mobileye’s stock price has fallen 72% and is currently trading at a market cap of $9.4 billion, ahead of a pre-market rally. Mobileye held its IPO nearly two years ago at a company valuation of $17 billion.

Intel currently owns 88% of Mobileye, and selling shares in the company, or even taking control of it, was seen as a quick way to inject cash to reduce its recent cuts and allow for the billions needed to build new manufacturing plants.

Intel has announced it will lay off 15% of its workforce, but at the same time the chipmaker needs to complete construction of at least three new factories in the United States and Israel in order to implement its production strategy to compete with rivals.

Intel announced last month that it would cut spending by $10 billion, and earlier this week said it would spin off its manufacturing division in order to attract outside investors.

Since Intel has sold only 12% of Mobily’s shares since its IPO in late 2022, Mobily’s shares were considered desirable and its price rose. But after Mobily lowered its outlook in recent quarters, the stock price fell sharply.

Intel may have seen that Mobileye shares had potential to rise, or in today’s clarification it may also have been required to prevent a further decline caused by speculation and reports in the US financial media that it was considering selling its stake in Mobileye.

This article was published in Globes, Israeli Business News – en.globes.co.il – on September 19, 2024.

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