Intel Corp. (INTC, Financial) announced on Tuesday it is acquiring a 15% stake in privately held Here International BV for an undisclosed amount.
Here is a global provider of digital maps and location-based services located in the Netherlands. Intel is purchasing the ownership stake from the company’s current indirect shareholders, Volkswagen’s (XTER:VOW, Financial) Audi AG, BMW AG (BUD:BMW, Financial) and Daimler AG (XTER:DAI, Financial).
The two companies are planning to collaborate on technology for autonomous vehicles and Internet of Things. Specifically, they will be developing highly scalable proof-of-concept architecture that supports real-time updates of traffic and road conditions for fully automated vehicles.
“Cars are rapidly becoming some of the world’s most intelligent, connected devices,” Intel CEO Brian Krzanich said. “We look forward to working with Here and its automotive partners to deliver an important technology foundation for smart and connected cars of the future.”
California-based Intel said it will also work with the three German carmakers to test the architecture. Intel and Here aspire to make the architecture available across the automotive industry as a product that will simplify and shorten automakers’ development time.
The architecture the companies hope to create will be designed to help make autonomous driving safe and predictable. While current navigation technology can pinpoint a car’s location within meters, Intel and Here want the next generation of high-definition mapping to determine the location within centimeters.
“A real-time, self-healing and high-definition representation of the physical world is critical for autonomous driving, and achieving this will require significantly more powerful and capable in-vehicle computer platforms,” Here CEO Edzard Overbeek said.
The companies also plan to explore the options for other devices that will benefit from this technology.
Audi, BMW and Daimler bought Here from Nokia (NOK, Financial) in 2015 for 2.5 billion euros ($2.6 billion). While the financial details of the Intel deal have not been disclosed, based on the original purchase price, Intel’s stake could be worth 375 million euros.
The deal is expected to close after regulatory approval in the first quarter of 2017. If the deal is completed, the German car manufacturers’ Here stake would drop to around 75%.
Among the gurus invested in Intel, PRIMECAP Management (Trades, Portfolio) is the largest shareholder with 0.66% of outstanding shares. This represents 1.2% of PRIMECAP’s total assets managed. Ken Fisher (Trades, Portfolio) and Bill Nygren (Trades, Portfolio) are the second- and third-largest holders. In total, 32 gurus hold positions.
Intel has a market cap of $173.8 billion; its shares were trading around $36.67 on Wednesday with a price-earnings (P/E) ratio of 17.3, a price-book (P/B) ratio of 2.7 and a price-sales (P/S) ratio of 3.1.
Disclosure: I do not own stock in any companies mentioned in the article.
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