Annual report pursuant to Section 13 and 15(d)

Acquisitions & Divestitures

v3.10.0.1
Acquisitions & Divestitures
12 Months Ended
Dec. 29, 2018
Business Combinations [Abstract]  
Acquisitions and Divestitures [Text Block]

ACQUISITIONS
During 2018, we completed five acquisitions qualifying as business combinations that were not material to our operations. During 2017, in addition to the Mobileye acquisition shown below, we completed two acquisitions qualifying as business combinations. During 2016, we acquired Altera for $14.5 billion, and, in addition, completed 11 acquisitions qualifying as business combinations for aggregate consideration of $1.1 billion.
Other acquisitions completed in 2018, 2017, and 2016, both individually and in the aggregate, were not significant to our results of operations, and substantially all of the consideration, which primarily consisted of cash, was allocated to goodwill and identifiable intangible assets. For information on the assignment of goodwill to our operating segments, see "Note 12: Goodwill," and for information on the classification of intangible assets, see "Note 13: Identified Intangible Assets."
Mobileye
As of August 21, 2017, upon the completion of our tender offer, we acquired 97.3% of the outstanding ordinary shares of Mobileye, a global leader in the development of computer vision and machine learning, data analysis, localization, and mapping for advanced driver- assistance systems and autonomous driving. This acquisition combines Mobileye's leading computer vision expertise with Intel’s high-performance computing and connectivity expertise to create automated driving solutions from car to cloud. 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 transaction also extends Intel’s strategy to invest in data-intensive market opportunities that build on our strengths in computing and connectivity from the cloud, through the network, to the device. We acquired the remaining 2.7% of Mobileye shares in April 2018.
Total consideration to acquire Mobileye was $14.9 billion (net of $366 million of cash and cash equivalents acquired), of which $14.5 billion was paid in 2017 and the remainder in 2018.
The fair values of the assets acquired and liabilities assumed in the acquisition of Mobileye, by major class, were recognized as follows:
(In Millions)
 
 
Short-term investments and marketable securities
 
$
370

Tangible assets
 
227

Goodwill
 
10,283

Identified intangible assets
 
4,482

Current liabilities
 
(69
)
Deferred tax liabilities and other
 
(418
)
Total
 
$
14,875


We assumed outstanding unvested Mobileye stock options and RSUs granted under two Mobileye equity plans. We will not grant additional equity awards under these two Mobileye equity plans. In connection with the acquisition, we recognized share-based compensation expense of $71 million for cash-settled awards.
Goodwill of $10.3 billion arising from the acquisition is attributed to the expected synergies and other benefits that will be generated from the combination of Intel and Mobileye. Substantially all of the goodwill recognized is not expected to be deductible for tax purposes. The goodwill recognized from the acquisition is included within "all other."
The identified intangible assets assumed in the acquisition of Mobileye were recognized as follows:
 
 
Fair Value
(In Millions)
 
Weighted Average
Estimated Useful Life
(In Years)
Developed technology
 
$
2,346

 
9
Customer relationships and brands
 
777

 
12
Identified intangible assets subject to amortization
 
3,123

 
 
In-process research and development
 
1,359

 
 
Identified intangible assets not subject to amortization
 
1,359

 
 
Total identified intangible assets
 
$
4,482

 
 

DIVESTITURES
Wind River Systems, Inc. (Wind River)
During the second quarter of 2018, we completed the divestiture of Wind River and recognized a pre-tax gain of $494 million.
Intel Security Group
On April 3, 2017, we closed the transaction with TPG VII Manta Holdings, L.P., now known as Manta Holdings, L.P. (TPG), transferring certain assets and liabilities relating to ISecG to a newly formed, jointly owned, separate cybersecurity company called McAfee.
Total consideration received was $4.2 billion, consisting of $924 million in cash proceeds, $1.1 billion in the form of equity representing a 49% ownership interest in McAfee, and $2.2 billion in the form of promissory notes issued by McAfee and TPG. During the third quarter of 2017, McAfee and TPG repaid the $2.2 billion of promissory notes, which are included within proceeds from divestiture.
The carrying amounts of the major classes of ISecG assets and liabilities as of the transaction close date included the following:
(In Millions)
 
Apr 1,
2017
Accounts receivable
 
$
317

Goodwill
 
3,601

Identified intangible assets
 
965

Other assets
 
276

Total assets
 
$
5,159

 
 
 
Deferred income
 
$
1,553

Other liabilities
 
276

Total liabilities
 
$
1,829


As of the transaction close date, we recognized a pre-tax gain of $387 million within "Interest and other, net," which is net of $507 million of currency translation adjustment losses reclassified from accumulated other comprehensive income (loss) associated with currency charges on the carrying values of ISecG goodwill and identified intangible assets. In addition, we recognized a tax expense of $822 million.