Veoneer Jumps as Qualcomm Outbids Magna to Buy Sensor, Software Maker

© Reuters.

By Dhirendra Tripathi

Investing.com – Veoneer stock (NYSE:VNE) climbed more than 4% Monday after it accepted the joint offer made by Qualcomm (NASDAQ:QCOM) and SSW to buy the company.

The Qualcomm-SSW combination outbid Magna International (NYSE:MGA) which had first made the offer for Veoneer.

The maker of Snapdragon chips had offered $37 in cash for each share of Veoneer, 18% higher than Magna’s July 23 offer of $31.25.

Qualcomm and SSW’s offer values Veoneer’s equity at $4.5 billion. The transaction is expected to close next year. Qualcomm stock fell 1.6%.

At per the deal structure, SSW Partners will acquire all of the outstanding capital stock of Veoneer, shortly after which it will sell the Arriver business to Qualcomm and retain Veoneer's tier-1 supplier businesses.

Veoneer designs, develops and manufactures software, hardware and systems for occupant protection, advanced driving assistance systems, collaborative and automated driving.

Its sensors and software solutions are aimed at preventing traffic accidents and, when accidents are unavoidable, its restraint control systems help lessen the effects of a crash.

Qualcomm will incorporate Arriver's computer vision, drive policy and driver assistance assets into its leading Snapdragon Ride Advanced Driver Assistance Systems solution. This will enhance Qualcomm's ability to deliver an open and competitive ADAS platform for automakers and tier-1s at scale.

Veoneer has terminated its prior acquisition agreement with Magna and shelved its October 19 special meeting that was previously scheduled to approve that agreement, Qualcomm said in a note.

As cars get smart, demand for products made by companies like Veoneer is only expected to increase, providing the likes of Qualcomm an opportunity to go beyond their bread-and-butter business of providing chips for mobile and other gadgets.  

Veoneer pegs its total addressable market at ~$18 billion by 2023 and ~$29 billion in 2026.

Due to dependence on premium brands, Veoneer is over-represented with OEMs which tend to have lower light vehicle volumes. Over the next five years, Veoneer expects to increase its percentage of sales with the top 10 OEMs, based on light vehicle production.