Israeli firm wants to spin out its self-driving tech, but worries the SEC

The Israeli semiconductor company that spun out of Intel and eventually went public, Mobileye, is seeking to make its management more transparent, if its unusual proposal for a new company to be named Mobileye

Youi Technologies is a potential stock-market offering that would entrust its core technology to a new firm, taking the cutting-edge data-driven algorithms Mobileye engineers build and developing them into a scalable self-driving car business. In return, Mobileye would get almost 50 percent of Youi as its ownership share, with no equity in the new company and no stake in its management team. Additionally, its chief technology officer will hold three non-voting board seats and have exclusive hiring and firing power. By some reasonable metrics of governance, this arrangement appears to be far more shareholder-friendly than the current Mobileye CEO.

Youi is a key component of Intel’s autonomous vehicle play, and even though the selling of Mobileye by Intel could be consummated under the auspices of a separate, new company, the former may not be able to maintain the status quo indefinitely. With its auto-driving system in the second-generation technology, its AltspaceVR virtual-reality platform and an existing successful autonomous vehicle offering, there is potentially a lot of value available to buy on the public market and a demand in the industry for artificial intelligence. Youi also has the cash it would need to pay its founders as well as its proposed 40 percent stake of the new company.

Youi is expected to file a form S-1 next month with the Securities and Exchange Commission (SEC) providing details of its case. This timeline, beyond its original review with the SEC, required the company to run its plan by outside consultants. Despite the complexity of establishing a new public company — which also makes it virtually certain the proposal will be rejected by the SEC, due to the requirement to disclose governance issues — the company is going forward anyway.

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