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Qualcomm on Monday said it would buy out part of auto component supplier Veoneer in a deal valued at $ 4.5 billion, as the chipmaker dives deeper into the auto market.
Qualcomm is partnering with investment firm SSW Partners to complete the transaction. Qualcomm will acquire Veoneer’s Arriver business, which focuses on computer vision, driving policy and driver assistance, according to a press release. SSW will keep the rest of Veoneer, seeking to sell it in pieces.
Prior to Monday’s deal, Veoneer had agreed in July to be acquired by Magna International for $ 31.25 a share. Qualcomm and SSW pay $ 37 per share, beating the previous offer. The purchase price is 86% higher than the Veoneer share price before Magna’s announcement, according to Qualcomm.
Veoneer will pay Magna a $ 110 million termination fee, Magna said in a statement.
The deal underscores the importance of the auto market to Qualcomm and other tech companies, as cars include more computer parts such as sensors and processors. Technology providers, including Qualcomm, are investing heavily in advanced driver assistance systems, or ADAS, that allow cars to automatically stay in a freeway lane or brake in advance to avoid collisions. Intel’s Mobileye is also focusing on ADAS systems.
ADAS functionality is not intended for fully autonomous driving, but relies on many of the same sensors and algorithms. The advances of ADAS can also be applied to self-driving cars.
Qualcomm has announced plans to integrate Arriver software into its Snapdragon Ride platform. Arriver was originally created through a partnership between Veoneer and Qualcomm last year. Qualcomm CEO Cristiano Amon called his company the “natural owner” of Arriver’s assets, which are mostly software and can ultimately run on Qualcomm chips.
Qualcomm executives say Snapdragon Ride is more open than competing products, allowing automakers and their suppliers to dig through its code and build their own features on Qualcomm’s chips and software.
Automakers like GM are introducing new software platforms that will update automatically over wireless connections and aim to get customers to pay for services like hands-free driving.
Although Qualcomm’s automotive business is only a small part of the business, it is growing rapidly. In the most recent quarter, Qualcomm reported $ 253 million in automotive revenue, compared to $ 3.86 billion for handset technology. Automotive activity increased 83% compared to the same period last year.
The price Qualcomm will ultimately pay depends on what happens with the rest of the assets SSW will own. Qualcomm expects the deal to close next year.
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