Qualcomm Offers $4.6 Billion for Veoneer, Topping Magna Bid
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Qualcomm Inc. offered to buy automotive technology company Veoneer Inc. for $4.6 billion, muscling in on a bid Magna International Inc. made for the supplier last month.
At $37 a share, Qualcomm is offering an 18% premium to Magna’s $31.25-a-share bid. Veoneer and Magna said last month their boards had unanimously approved what would have been a $3.8 billion deal. Qualcomm said in a statement Aug. 5 that its all-cash offer wouldn’t require stockholder approval.
With Veoneer, Qualcomm would get a firmer foothold in the emerging market for driver-assistance technology. Hands-free driving and crash-avoidance technology have become hotly contested battlegrounds as automakers seek to boost prices and best rivals with options that command a premium. Both global auto suppliers and chipmakers are increasingly positioning for growth in advanced safety features in passenger cars.
Qualcomm “was the logical alternate bidder” for Veoneer, given a collaboration the companies first announced last year to develop driver-assistance and autonomous systems, Dan Levy, an analyst at Credit Suisse Securities, wrote to clients. He doesn’t expect Magna — the world’s fourth-largest supplier to the auto industry by sales — to pursue a topping bid because investors were already wary of the planned acquisition announced last month.
Monitors display Veoneer Inc. signage during the company's first day of trading on the floor of the New York Stock Exchange in July of 2018. (Michael Nagle/Bloomberg News)
Qualcomm shares fell as much as 2.5% in New York trading, while Magna’s stock rose as much as 1.6%. Veoneer shares surged up to 29% to $40.46, the highest intraday since October 2018.
Magna declined to comment. Veoneer said it received Qualcomm’s proposal and that its board will evaluate it, complying with its legal obligations and the terms of its agreement with Magna. Veoneer said in a regulatory filing last month it had agreed to pay a $110 million breakup fee to Magna if it received a superior proposal.
Qualcomm has been trying to expand its reach beyond smartphones. Automotive products accounted for around 3% of chip sales last year and have been growing slowly in recent quarters.
Chief Executive Officer Cristiano Amon wrote in a letter that his company’s interest was “driven by” Arriver, Veoneer’s software unit working on helping cars perceive and make driving decisions.
“While we plan to explore a divestment of the non-Arriver assets to parties who are better positioned to grow these strong and stable businesses, neither the separation nor sale of the non-Arriver assets is a condition of our proposal,” Amon told Veoneer’s board. “Neither will be required to be completed prior to closing of the transaction.”
Qualcomm probably assumes it will be able to recover part of what it plans to pay for Veoneer through the sale of other assets, Joe Spak, an analyst at RBC Capital Markets, said in a report. Pairing Arriver with Qualcomm may make more sense than with Magna, he wrote, because it has operated as an independent business that is trying to sell products to Magna’s rivals.
“From here, the ball is back in MGA’s court,” Spak said, referring to Magna. “Will they stay disciplined or pay up or get in a bidding war with a larger company and balance sheet? From our perspective, competing with QCOM seems difficult.”
Qualcomm and Veoneer have said they plan to develop a driver-assistance and autonomous system integrating Veoneer’s perception technology and software with Qualcomm chips. The companies said in January they had presented their systems to automakers and top-tier suppliers and got positive feedback, though they didn’t announce any customers.
— With assistance from Gabrielle Coppola and Ed Ludlow.
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