Bidding War Brewing for Veoneer (VNE): Here’s what you need to know

Veoneer, Inc.The $ 3.8 billion takeover bid for VNE by Magna International MGA encountered a roadblock recently, when the chipmaker Qualcomm QCOM has submitted a non-binding proposal to acquire all of Veoneer’s outstanding shares for $ 4.6 billion.

Based in Stockholm, Sweden, Veoneer designs, develops and manufactures innovative software, hardware and systems for occupant protection, advanced driver assistance systems (ADAS), collaborative and automated driving. The automotive company grew out of a long-standing supplier of safety equipment Autoliv Inc. ALV in 2018, and offers radar systems, brakes, driver monitoring equipment, restraint controls and driver assistance software.

In July, automotive supplier Magna submitted an offer to acquire all of the issued and outstanding shares of Veoneer for $ 31.25 per share in cash, representing a net worth of $ 3.8 billion and a value of $ 3.8 billion. $ 3.3 billion business. The transaction was unanimously approved by the boards of directors of both companies.

Based in San Diego, California, Qualcomm designs, manufactures and markets digital wireless telecommunications products and services based on Code Division Multiple Access (CDMA) technology. These products include CDMA-based integrated circuits (ICs) and system software for wireless voice and data communications, as well as global positioning system (GPS) products.

Qualcomm’s offer, which is $ 800 million more than Magna’s offer, has already received approval from the company’s board of directors and does not require shareholder approval. Qualcomm’s offer is $ 37 per share, an 18% premium over Magna’s offer. The acquisition would be funded from the company’s existing liquidity.

Following the announcement of the latest offer, shares of Veoneer rose 28.5% yesterday, to close the trading session at $ 40.15.

Veoneer’s board will assess Qualcomm’s proposal and the terms of Magna’s merger deal before making a final appeal. It is debatable whether or not Magna will submit a counter-offer.

In the context of the transformation of the automotive industry, it has become imperative for car manufacturers to have a partner who develops horizontal platforms that bring innovation and enable competition. For Qualcomm, the proposed acquisition will bring the complementary technology and customer base of Veoneer to provide a competitive ADAS platform to automakers and Tier 1 suppliers at scale. For Magna, the acquisition is expected to result in more ADAS content per vehicle and strengthen its global skills base. In addition, the combined entity will be an industry leader in active safety solutions, positioning itself well for the transition to higher levels of autonomy.

For Veoneer, a buyout is just as advantageous. It will deliver exceptional value to Veoneer’s shareholders through an attractive bonus and provide employees with the opportunity to work with one of the automotive industry’s most accomplished suppliers.

Veoneer already has an existing relationship with Qualcomm. The two companies signed an agreement in January to collaborate on an ADAS platform. The agreement merges Qualcomm’s silicon technology and toolchain with Veoneer’s sensor and software system into a highly competitive ADAS solution. This pre-relationship justifies that Qualcomm obtained the takeover offer.

The ongoing bidding war between Magna and Qualcomm bodes well for the future of ADAS technology. Well, only the future will reveal which company will emerge victorious from this battle, to become a leading name in the ADAS market.

Veoneer currently has a Zacks rank of 4 (Sell).

You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.

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QUALCOMM Incorporated (QCOM): Free Stock Analysis Report

Autoliv, Inc. (ALV): Free Stock Analysis Report

Magna International Inc. (MGA): Free Stock Analysis Report

Veoneer, Inc. (VNE): Free Inventory Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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