Qualcomm, investment firm agree to buy Veoneer for $4.5B, trumping Magna

Tech supplier Veoneer on Monday said it reached a definitive agreement to be sold to Qualcomm Inc. and SSW Partners, a New York-based investment partnership, and officially terminated its previous merger agreement with Magna International Inc.

Veoneer said in a statement that Qualcomm, a semiconductor and wireless tech company, and SSW Partners would buy it for $37 per share in an all-cash transaction, representing a total equity value for Veoneer of $4.5 billion.

Veoneer said SSW Partners will initially acquire Veoneer as a whole and will then sell its Arriver software unit to Qualcomm shortly after the deal closes. SSW Partners will retain the rest of Veoneer's Tier 1 supplier business, including its restraint control systems and active safety units, and “will lead the process of finding strong, long-term strategic partners” for them, the companies said in a news release.

“Qualcomm is the natural owner of Arriver,” Qualcomm CEO Cristiano Amon said in a statement. “By integrating these assets, Qualcomm accelerates its ability to deliver a leading and horizontal [advanced driver assistance systems] solution as part of its digital chassis platform.”

Qualcomm’s offer is an 18 percent premium to Magna's $31.25-a-share bid. Qualcomm said its cash offer won’t require stockholder approval.

Shares in Veoneer closed Monday's trading in New York up 4.8 percent to $36.20.

Magna International, which had a previous offer to buy Veoneer accepted by the Swedish company, on Monday confirmed the news. The Canadian supplier giant had previously made a $3.8 billion offer for Veoneer, which the Veoneer board recommended shareholders accept and was to be voted on by them on Oct. 19.

Instead, Magna said Veoneer determined the Qualcomm offer was a “superior proposal.” Veoneer will pay Magna a $110 million termination fee, and Magna waived its right to make a counterproposal.

“Magna’s waiver decision underscores our disciplined approach to valuation as we pursue strategic acquisitions and continue to act in the best interests of our shareholders,” Magna CEO Swamy Kotagiri said in a statement. “We remain confident in our long-term value creation potential and our path forward as one of the world’s largest automotive suppliers and key enabler to meet future mobility needs.”

Magna International ranks No. 4 on Automotive News' list of the top 100 global suppliers worldwide, with sales of $32.6 billion to automakers in its 2020 fiscal year.

The deal is expected to close in 2022, the companies said. It remains subject to regulatory approvals in the United States and Europe and must be approved by Veoneer shareholders.

Who will own Veoneer’s non-Arriver units over the long term remains an open question. In a statement, SSW said it would focus on finding “strong, long-term strategic homes'' for those units and said it would work with the company’s management to “ensure the pursuit of Veoneer’s existing business plan.” SSW Partners was founded at the beginning of the year, and its investment in Veoneer is its first capital commitment in that time, the companies said.

SSW’s principals “are experienced investors and advisors in both Europe and the automotive sector and will prioritize the smooth continuation of business activities for the customers and employees of the RCS and Active Safety businesses,” the companies said in a statement.

The acquisition of Veoneer’s software unit would be a major development for Qualcomm’s growing automotive business and could serve as the backbone of its ADAS business moving forward. Qualcomm said it would incorporate Arriver’s computer vision, drive policy and driver assistance assets into its Snapdragon Ride ADAS platform.

“This will augment Qualcomm’s ability to deliver an open and competitive ADAS platform for automakers and Tier-1s at scale,” the companies said in the news release.
 

Reuters, Bloomberg and Automotive News Canada reporter Greg Layson contributed to this story.