BY Richard Summerfield
Car parts giant Magna International has agreed to acquire Swedish rival Veoneer Inc. in an all-cash deal worth $3.8bn.
Under the terms of the deal, Magna will acquire all the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing an equity value of $3.8bn, and an enterprise value of $3.3bn, inclusive of Veoneer’s cash, net of debt and other debt-like items as of 31 March 2021. The price represents a 57 percent premium to Veoneer’s closing price on Thursday, the day the deal was announced.
The acquisition will help Magna achieve about $100m in annual cost savings by 2024, according to a joint statement released by the two companies. The deal, which has been approved by the boards of both companies, is expected to close by the end of this year.
For Magna, the acquisition of Veoneer will provide a boost to the company’s efforts to build driver assistance technology geared toward autonomous vehicles. Veoneer manufactures advanced driver assistance systems, such as collision warning and parking assist systems.
Global automotive suppliers are increasingly positioning themselves to benefit from the growth in advanced safety features in passenger cars. Semi-autonomous features like hands-free driving and crash-avoidance technology are becoming ever more prevalent.
Veoneer was spun off by auto-safety supplier Autoliv Inc. in 2018.
“Veoneer’s complementary technology offerings, customer base, and geographic footprint make it an excellent fit with our ADAS business, and the acquisition strengthens our global engineering and software development talent base,” said Swamy Kotagiri, chief executive of Magna. “We expect the combined entity to be an industry leader in active safety solutions, to enhance its position in complete ADAS systems, and to be well-positioned for the transition towards higher levels of autonomy. The acquisition is also consistent with our go-forward strategy to accelerate investment in high-growth areas.”
“This is a compelling transaction for all stakeholders,” said Jan Carlson, chairman, president and chief executive of Veoneer. “It will deliver significant and immediate value to Veoneer stockholders through an attractive premium to our trading price, and provide new opportunities for our employees to join one of the most capable suppliers in the mobility space. In addition, combining forces with Magna will allow the combined business to elevate its status as a full-systems ADAS supplier, which should benefit our customers, supplier partners and ultimately consumers.”
News: Magna's $3.8 billion Veoneer buy to drive car safety business