Qualcomm to Acquire Veoneer for $4.6 Billion, Outbids Magna

Veoneer Acquisition Faces Challenge from Qualcomm

The planned $3.8 billion acquisition of Swedish automotive technology firm Veoneer by Magna International has encountered an obstacle. This development occurred Thursday when chip manufacturer Qualcomm presented a competing offer for the company.

Qualcomm’s bid amounts to $4.6 billion, translating to $37 per share. The chipmaker announced that its proposal has already been sanctioned by Veoneer’s board of directors and will not require shareholder approval.

Previously, Veoneer and Magna had jointly announced in July that their respective boards had given the go-ahead for the acquisition.

Veoneer's Role in ADAS Technology

Veoneer specializes in the creation of sophisticated advanced driver assistance systems (ADAS). These systems encompass both the hardware and software necessary for vehicles to execute specific tasks under defined circumstances.

Examples of these actions include lane changes on highways and the activation of emergency braking. While not representing fully autonomous vehicles, ADAS features are increasingly prevalent and accessible in modern automobiles.

Competitive Landscape and Bidding War

The escalating competition between Magna and Qualcomm underscores a positive outlook for the future of ADAS technology. Both companies aim to maintain a competitive edge against established Tier-1 ADAS suppliers like Continental and Bosch.

Currently, Qualcomm’s market capitalization is $164.8 billion, significantly larger than Magna’s at $25.3 billion. Whether Magna will respond with a counter-offer remains to be seen.

Market Reaction and Stock Performance

The market has reacted favorably to Qualcomm’s bid. Veoneer’s stock price experienced a substantial increase, rising almost $7 per share from $31.22 to $38.20 between Wednesday and Thursday.

Before the initial announcement of the sale to Magna on July 23, Veoneer shares were valued at $19.93 each.

Veoneer's History and Partnerships

Veoneer originated as a spin-off from automotive safety systems manufacturer Autoliv in 2018. The company established a joint venture with Volvo Cars, known as Zenuity, focused on advanced driver assistance systems.

This venture was subsequently dissolved in July of the previous year.

Existing Collaboration with Qualcomm

Veoneer already maintains a collaborative relationship with Qualcomm. In January, the two companies entered into an agreement to jointly develop an ADAS platform.

This pre-existing partnership potentially streamlines the integration process should Qualcomm’s acquisition bid be successful.