Veoneer, Inc. VNE was recently acquired by Qualcomm QCOM for $4.5 billion, as the latter knocked out Magna International MGA with a higher bid. This acquisition puts an end to the bidding war brewing between the chipmaker and the car supplier for control of the Swedish automotive-technology company.
Per the deal, Qualcomm partnered with the New York-based SSW Partners to acquire Veoneer in an all-cash transaction for $37 per share, an 18% premium over Magna’s bid made in July. The boards of both Veoneer and Qualcomm have approved the transaction and the deal is expected to close next year.
At closing of the transaction, SSW Partners, a newly-formed private equity firm, will sell Veoneer’s autonomous-driving software operation known as Arriver to Qualcomm, and retain the Swedish company’s other Tier 1 supplier businesses.
Based in Stockholm, Sweden, Veoneer designs, develops and manufactures innovative software, hardware and systems for occupant protection, advanced driving assistance systems (ADAS), collaborative and automated driving. The autotech company spun off from the long-time safety equipment supplier, Autoliv Inc. ALV, in 2018, and offers radar systems, brakes, driver monitoring equipment, restraint controls and driver assist software.
This July, the automotive supplier Magna submitted an offer to acquire all of the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing an equity value of $3.8 billion and an enterprise value of $3.3 billion. The transaction had been unanimously approved by the boards of both companies. It looked like that the deal would move forward, until Qualcomm submitted its bid which is $800 million more than Magna’s offer. Magna did not submit a counterbid.
Veoneer already has an existing relationship with Qualcomm. The two companies signed an agreement this January to collaborate on an ADAS platform. The agreement integrates Qualcomm’s silicon technology and tool chain with Veoneer’s sensor and software system in an extremely-competitive ADAS solution. This pre-relationship provides rationale for Qualcomm winning the buyout offer.
Headquartered in San Diego, CA, Qualcomm designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. These products include CDMA-based integrated circuits (ICs) and system software for wireless voice and data communications as well as global positioning system (GPS) products.
This is not Qualcomm’s first major acquisition in the current year. In January, Qualcomm acquired the high-performance computing start-up, Nuvia, for $1.4 billion, as the former seeks to expand into markets beyond telecoms.
The latest purchase is especially bullish news for Qualcomm, as it will provide the company with Veoneer’s complementary technology and customer base to deliver a competitive ADAS platform to automakers and Tier 1 suppliers at scale. Acquiring the Arriver business within Veoneer should give Qualcomm a robust foothold in the emerging market for driver-assistance technology. This will help the company advance its self-driving car ambitions, thus making it a leading name in the ADAS market.
For Veoneer, the buyout is equally beneficial. It will deliver an outstanding value to Veoneer stockholders through an alluring premium and provide employees the opportunity to work with one of the most accomplished chipmakers. Veoneer will pay Magna a termination fee of $110 million.
Veoneer currently carries a Zacks Rank of 4 (Sell).
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