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Automotive giant Magna International acquires rival Veoneer for $3.8 billion

Automotive giant Magna International acquires rival Veoneer for $3.8 billion

Canada-based auto parts maker Magna International has announced in a press release published on Thursday that it will buy its rival company, Sweden-based Veoneer.

Veoneer makes advanced driver assistance systems (ADAS) and the deal could push Magna’s ADAS business as a global leader in the industry. 

ADAS adds automotive features such as collision warning and parking assist. Some systems use collected data from cameras and radar to monitor the surroundings and respond to a situation. 

Acquisition to give Magna access to new customers

Magna said that it will acquire all of Sweden-based Veoneer’s issued and outstanding shares for $31.25 per share, which represents $3.8 billion in equity value and an enterprise value of $3.3 billion, which includes Veoneer’s cash, net of debt, and other debt-like items as of March 31, 2021.

Along with expanding Magna’s ADAS business, the move is anticipated to give the company access to new customers and regional markets, including Asia. The acquisition is also expected to save Magna about $100 million in annual costs by the year 2024.

Better position to compete with market leaders

The acquisition could also help Magna better compete 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, according to Reuters. 

Magna anticipates operating Veoneer’s Arriver sensor perception and drive policy software platform as an independent business unit and acquiring Veoneer’s position in restraint control systems.

“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,” said Magna CEO Swamy Kotagiri. 

Once the all-cash transaction is closed, Veoneer will be merged with Magna’s existing ADAS business and integrated into Magna’s electronics operating unit.

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