Magna agrees to buy Swedish driver technology firm Veoneer for US$3.8B
The Ontario-based auto parts manufacturer will pay US$31.25 per share in cash, a 57% premium that reflects an enterprise value of US$3.3 billion
TORONTO — Magna International Inc. is advancing its goal of becoming a global leader in advanced driver assistance technology by reaching an agreement to acquire Swedish automotive safety technology firm Veoneer for US$3.8 billion including debt.
The Ontario-based auto parts manufacturer will pay US$31.25 per share in cash, a 57% premium that reflects an enterprise value of US$3.3 billion.
The company plans to operate Veoneer’s Arriver sensor perception and drive policy software platform as an independent business unit and acquire its restraint control systems.
Veoneer will be combined with Magna’s existing ADAS business and integrated into its electronics operating unit.
The pro forma 2020 sales would be US$1.2 billion but Veoneer estimates the global market for the technology was about US$11 billion in 2020 and will reach US$29 billion by 2026.
Magna expects to realize annual synergies of about US$100 million by 2024 in addition to Veoneer’s previously announced initiatives.
Magna CEO Swamy Kotagiri says the acquisition is consistent with its strategy to accelerate investments in high-growth areas.
“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,” he said in a news release.
The transaction has been unanimously approved by both boards. Veoneer shareholders with about 40% of its stock have lined up to support the deal, which is expected to close near the end of 2021.
Kevin Chiang of CIBC World Markets says the deal is a “strategic positive.”
“In our view, the merger of Magna and Veoneer better positions the combined company to take advantage of this growing market opportunity, which should drive increased content per vehicle for Magna…and help increase Magna’s exposure into Europe and Asia as well as increase Magna’s exposure to Asian OEMs,” he wrote in a report.