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Intel to buy Israeli technology firm Mobileye for $15 billion

U.S. chipmaker Intel (INTC. O) agreed to buy driverless technology firm Mobileye (MBLY. N) for $15.3 billion on Monday, positioning itself for a dominant role in the autonomous-driving sector after missing the market for mobile phones. The $63.54 per share cash deal is the biggest technology takeover in Israel's history and the largest purchase of a company solely focused on the self-driving sector. Intel will integrate its automated driving group with Mobileye's operations, with the combined entity being run by Mobileye Chairman Amnon Shashua from Israel. Intel Chief Executive Brian Krzanich said the acquisition, which unites Intel's processors with Mobileye's computer vision, was akin to merging the "eyes of the autonomous car with the intelligent brain that actually drives the car."Mobileye accounts for 70 percent of the global market for driver-assistance and anti-collision systems. It employs 660 people and had adjusted net income of $173.3 million last year. Intel said it expected the transaction to close within the next nine months and to immediately boost its non-GAAP earnings per share and free cash flow. The price represents a premium of around 33 percent to Mobileye's Friday closing price of $47 a share."It's an area where the company (Intel) has had very little presence - the automotive market, and so this is a tremendous opportunity for them to get into a market that has significant growth opportunities," said Betsy Van Hees, an analyst at Loop Capital Markets who has a "buy" rating on Intel shares.

"Mobileye's technology is very critical ... The price seems fair," she added. Because Mobileye's Shashua will remain in charge and the combined entity will be based in Israel, analysts said they expected it to be far more difficult for rivals to mount a counter offer for Mobileye. Shashua and two other senior Mobileye executives stand to do well by the deal: together they own nearly 7 percent of the company. Shmuel Harlap, Israel's biggest car importer and one of Mobileye's earliest investors, also holds a 7 percent stake. Yossi Vardi, seen as the godfather of Israeli high-tech, said the deal was a big endorsement of the whole sector.

"I'm sure that this ... will be a very important impetus to create a whole industry related to autonomous and connected vehicles (in the country)," he said. BATTLE FOR SELF-CONTROL Automakers and their suppliers have been expanding alliances in the race to develop self-driving cars, a sector that once seemed a science-fiction dream but is drawing closer to reality month after month. Mobileye and Intel are already collaborating with German automaker BMW (BMWG. DE) on a project to put a fleet of around 40 self-driving test vehicles on the road in the second half of this year.

At the same time, Mobileye has teamed up with Intel for its fifth-generation of chips that will be used in fully autonomous vehicles that are scheduled for delivery around 2021. While Intel is known for hardware chips and Mobileye for collision detection software, their merger promises to create the most complete portfolio of technologies needed for driverless vehicles, including cameras, sensor chips, in-car networking, roadway mapping, machine learning and cloud software, as well as the data-centers needed to manage all the data involved. Last October, Qualcomm announced a $47 billion deal to acquire the Netherlands' NXP, the largest automotive chip supplier, putting pressure on other chipmakers seeking to make inroads into the market for autonomous driving components, including Intel, Mobileye and rival NVIDIA NVDIA. O. The Qualcomm-NXP deal, which will create the industry's largest portfolio of sensors, networking and other elements vital to autonomous driving, is expected to close later in 2017, subject to regulatory and shareholder approvals. For a dozen years, Mobileye has relied on Franco-Italian chipmaker STMicroelectronics to produce chips that the Israeli company sells to many of the world’s top automakers for its current, third-generation of driver-assistance systems. Mobileye's relationships with automakers, leading suppliers and STMicroelectronics will continue uninterrupted, the companies said in their statement, and Mobileye's current product roadmap will not be affected. Founded in 1999, Mobileye made its mission to reduce vehicle injuries and fatalities. After receiving an investment of $130 million from Goldman Sachs in 2007, it listed on the New York Stock Exchange in 2014.

Schaeuble rejects U.S. criticism of German trade surplus

German Finance Minister Wolfgang Schaeuble on Tuesday rejected U.S. criticism of Germany's record current account surplus, setting the stage for a heated debate on trade when G20 policymakers meet next week. Germany holds the presidency of the G20 leading economies this year, a platform Chancellor Angela Merkel wants to use to safeguard multilateral cooperation after U.S. President Donald Trump questioned international alliances and obligations under plans to put "America first". Ahead of the G20 meeting in the German town of Baden-Baden, Trump's trade adviser Peter Navarro said on Monday the $65 billion U.S. trade deficit with Germany was "one of the most difficult" trade issues. Bilateral discussions were needed to reduce it outside of European Union restrictions, he said. Navarro's comments followed his complaints last month that Germany was exploiting a weak euro to gain a trade advantage. Speaking to foreign journalists in Berlin, Schaeuble said Germany's current account surplus was a result of the high competitiveness of its companies and that the euro zone as a whole was benefiting from Germany's economic strength."Nobody can claim that we are achieving these surpluses through (currency) manipulation," Schaeuble said, adding that the European Central Bank, an independent body, was in charge of the euro.

Touching on another thorny issue between Berlin and Washington, Schaeuble called for further steps by the G20 to strengthen financial market regulation."We're not yet at the finishing line," Schaeuble said, adding that governments should not forget the lessons learned from the global financial crisis triggered by bad loans in the U.S. a decade ago. One of the main themes of the G20 meeting next week would be to increase the resilience of economies against future shocks by implementing structural reforms, he added.

Trump has ordered reviews of major banking rules that were put in place after the global financial crisis. This prompted a warning from Jens Weidmann, an ECB policymaker and president of Germany's Bundesbank, who said last month it would be a mistake to roll back international regulation that had forced banks to build bigger buffers. Schaeuble said he would meet his U.S. counterpart Steven Mnuchin on Thursday next week to prepare for the broader Baden-Baden meeting on March 17-18. Merkel and Trump are due to meet in Washington on Tuesday.

Turning to China, Schaeuble said it and Germany favored an international order of free trade and open global markets. "But we are also very much advocating that this is respected when it comes to investment by foreign companies in China," the minister said. German Vice Chancellor Sigmar Gabriel has suggested that the European Union should refocus its economic policy toward Asia, should the Trump administration pursue protectionism. In a sign of already shifting trade flows, China became Germany's most important trading partner for the first time in 2016, overtaking the United States, which fell to third place behind France.