Driver-assistance goals spur new Magna pact
Canadian auto parts maker Magna International Inc on Thursday agreed to buy Swedish rival Veoneer Inc for about US$3.8 billion in cash to boost its efforts to build driver-assistance tech geared toward autonomous vehicles.
Veoneer makes advanced driver-assistance systems, known in the industry as ADAS, that add features ranging from collision warning to parking assist.
Some systems collect data from cameras and radar to monitor surroundings, interpret the situation and take action.
Veoneer New York-listed shares traded as high as US$31.36 shortly after the start of trading Friday, a gain of about 55 per cent, while Magna's New York-listed stock fell as much as 7.1 per cent, its biggest intraday drop in more than a year.
“This is a very good outcome for VNE shareholders,” Joseph Spak, an analyst at RBC Capital Markets, said in a note. The deal gives Veoneer more resources to develop its suite of driver-assistance systems and it now has a big customer for its vehicle perception and software platform, Spak wrote.
While fully self-driving vehicles are years away, assisted-driving features, such as adaptive cruise control, are becoming more common and the deal will help Magna to close the gap with market leaders Aptiv, Bosch and Continental.
“With the recent acquisition of Veoneer, we believe Magna is likely a fourth leading player with the opportunity to more directly compete with the big three,” Jefferies analyst David Kelley wrote in a research note.
Magna will buy out Veoneer's outstanding shares for US$31.25 each, and the acquisition represents an enterprise value of US$3.3 billion including debt, the companies said in a joint statement.
Stockholm-based Veoneer's market value was US$2.23 billion based on its Thursday closing price, Refinitiv Eikon data showed.
After its 2018 spinoff from Sweden's Autoliv, the world's largest producer of airbags and seatbelts, Veoneer suffered from a slump in light vehicle production and a global chip shortage, but demand has rebounded this year.
Veoneer on Friday reported 116-per-cent jump in second-quarter net sales to US$398 million as North American and European carmakers add radar and camera systems in their upcoming models.
The acquisition will expand Magna's ADAS business with major customers, provide access to new clients and regions, and save about US$100 million in annual costs by 2024, the company said.
The deal is expected to close by the end of this year.