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(Bloomberg) – Qualcomm Inc. has offered to buy automotive technology company Veoneer Inc. for $ 4.6 billion, building on Magna International Inc. after its offer for the supplier last month.
At $ 37 per share, Qualcomm is offering an 18% premium to Magna’s $ 31.25 per share offer. Veoneer and Magna said last month that their boards unanimously approved what would have been a $ 3.8 billion deal. Qualcomm said in a statement Thursday that its cash offer would not require shareholder approval.
With Veoneer, Qualcomm would gain a stronger foothold in the emerging market for driver assistance technology. Crash avoidance and hands-free driving have become a hotly contested battleground as automakers seek to raise prices and their top rivals. Global automotive suppliers and chip makers are increasingly positioning themselves for the growth of advanced security features.
Qualcomm “was the logical alternative bidder” for Veoneer, given a collaboration first announced last year by the companies to develop driver assistance and autonomous systems, Dan Levy, automotive analyst at Credit Suisse, said written to clients. He doesn’t expect Magna – the world’s fourth-largest auto supplier by sales – to pursue a higher offering because investors were already wary of its planned acquisition.
Qualcomm shares fell 2.5% in New York exchanges, while Magna shares rose 2.3%. Veoneer’s shares jumped 29% to $ 40.46, the highest intraday since October 2018.
Magna declined to comment. Veoneer said it has received Qualcomm’s proposal and that its board will assess it, in accordance with its legal obligations and the terms of its agreement with Magna. Veoneer said in a regulatory filing last month that it agreed to pay Magna a $ 110 million break-up fee if it receives a superior proposal.
What Bloomberg Intelligence says
“The purchase of Veoneer would expand Qualcomm’s automotive presence to include driverless technology and broaden the focus of automotive connectivity amid competition from Intel’s Mobileye and Nvidia’s Xavier. This is purely tech-driven: Veoneer is an unprofitable, low-margin company with around $ 1.6 billion in sales, compared to Qualcomm’s $ 30.7 billion. “
– Anand Srinivasan, Senior BI Analyst, Semiconductor Industry
Click here to read the research.
Qualcomm has tried to extend its reach beyond smartphones. Automotive products accounted for around 3% of chip sales last year and have seen slow growth in recent quarters.
CEO Cristiano Amon wrote in a letter that his company’s interest in Veoneer is driven by Arriver, Veoneer’s software unit that helps cars perceive and make driving decisions.
“While we plan to explore a divestiture of the Non-Arriving assets to parties who are best positioned to develop these strong and stable businesses, neither the separation nor the sale of the non-Arriving assets is a condition of our proposal.” , Amon told Veoneer. Advice. “None should be completed before the transaction closes. “
Qualcomm likely assumes that it will be able to recoup some of what it plans to pay for Veoneer through the sale of other assets, Joe Spak, analyst at RBC Capital Markets, said in a report. Twinning Arriving with Qualcomm may make more sense than with Magna, he wrote, as it’s an independent company trying to sell products to Magna’s rivals.
“From here the ball is back in MGA’s court,” Spak said, referring to Magna. “Are they going to stay disciplined, pay, or go into a bidding war with a bigger company and a bigger balance sheet?” From our point of view, competing with QCOM seems difficult.
Qualcomm and Veoneer have announced their intention to develop driver assistance and autonomous systems integrating Veoneer’s perception technology and software stack with Qualcomm chips. The companies said in January that they had introduced their systems to leading automakers and suppliers and had received positive feedback, despite not announcing any customers.
(Updates with Veoneer’s response in the sixth paragraph.)
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