Termination of agreement with Magna

According to its official page, Magna terminated its merger agreement with Veoneer. Magna is more than one of the world’s largest suppliers in the automotive sector. The company is a mobility technology company with a global, entrepreneurial-minded team of 158,000 employees.

Veoneer, Inc. is a worldwide leader in automotive technology. Its purpose is to create trust in mobility. Its head office is Stockholm, Sweden, and Veoneer has 7,500 employees in 11 countries.

Our media has already reported the possible deal between Magna and Veoneer. However, it seems that it was over and Venoeer will pay a termination fee of $110 million to Magna. Qualcomm and SSW Partners reach definitive agreement to acquire the Swedish company instead.

Who is Qualcomm?

Qualcomm is the world’s leading wireless technology innovator and the driving force behind the development, launch, and expansion of 5G. Its foundational technologies enable the mobile ecosystem and are found in every 3G, 4G and 5G smartphone. The company brings the benefits of mobile to new industries, including automotive, the internet of things, and computing. As a result, it can lead the way to a world where everything and everyone can communicate and interact seamlessly.

Who is SSW Partners LP?

SSW Partners invests in high-quality businesses and collaborates with partners to create enduring value for all stakeholders. The company focuses on businesses that consistently invest in their products and people. Also, it invests in the companies that have built their reputations based on the quality of the goods they produce or services they provide. In addition, the US company care people who prioritize the interests of all stakeholders, including employees, customers, owners, and communities.

More synergy?

Cristiano Amon, president and CEO of Qualcomm Incorporated mentioned in the following.

“Qualcomm is the natural owner of Arriver. By integrating these assets, Qualcomm accelerates its ability to deliver a leading and horizontal ADAS solution. Also the company can offer digital chassis platform. We believe that this transaction and structure benefits both Qualcomm’s and Veoneer’s shareholders, positions all of Veoneer’s businesses for success. This is because we will able to provide a compelling opportunity to customers and employees.”

In this transactions, every player including Veoneer, Magna, Qualcomm and SSW Partners are big companies. Therefore, it seems very difficult to understand clear reasons why not Magna but Qualcomm acquire the Swedish company.

The possible deal was Magna will acquire all of the issued and outstanding shares of Veoneer for $31.25 per share in cash. It represented an equity value of $3.8 billion, and an enterprise value of $3.3 billion. Also, it included Veoneer’s cash, net of debt and other debt-like items as of March 31, 2021.

However, the deal with Qualcomm is that it will pay $37.00 per share in an all-cash transaction. As a result, it represents a total equity value for Veoneer of $4.5 billion. Therefore, from shareholders’ points of view, the latter deal makes sense. Of course, we think that Veoneer expects that it can realize more synergy with Qualcomm than Magna.