Pursuant to the agreement, Magna will acquire all of the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing a total value of $3.8 billion, and an enterprise value of $3.3 billion, inclusive of Veoneer’s cash, net of debt and other debt-like items as of March 31, 2021.
The acquisition builds on Magna’s strengths and positions the company’s advanced driver assistance systems (ADAS) business as a global leader with comprehensive capabilities. The acquisition also expands Magna’s ADAS business with major customers and provides access to new customers and regions, including in Asia. Magna expects to operate Veoneer’s Arriver sensor perception and drive policy software platform as an independent business unit, consistent with Veoneer’s current practice. In addition, Magna will acquire Veoneer’s leading global position in restraint control systems.
“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,” said Magna CEO Swamy Kotagiri. “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.”
Following the closing of the transaction, Veoneer will be combined with Magna’s existing ADAS business and integrated into Magna’s electronics operating unit. The combined business will build upon relationships with both organizations’ automotive customers, suppliers and technology partners to develop best-in-class products.
Jan Carlson, Veoneer’s chairman, president and CEO, said, “This is a compelling transaction for all our stakeholders. It will deliver significant and immediate value to Veoneer stockholders through an attractive premium to our trading price, and provide new opportunities for our employees to join one of the most capable suppliers in the mobility space. In addition, combining forces with Magna will allow the combined business to elevate its status as a full-systems ADAS supplier, which should benefit our customers, supplier partners and ultimately consumers.”
Kotagiri added, “We have a great deal of respect for Veoneer’s team around the world and their culture of innovation and creativity. We look forward to welcoming Veoneer’s employees into our global Magna family and are confident that together we will be able to achieve great results and move faster to address the growing ADAS market.”
Highlights Of The Transaction
• Creates a global leader in ADAS with pro forma 2020 ADAS sales of $1.2 billion and capabilities across:
o Key component categories, including camera, radar, LiDAR and domain controllers; and
o Software features/functions, including perception and drive policy.
• Enhances Magna’s ADAS systems capabilities and adds significant engineering and software competency, including ArriverTM sensor perception and drive policy software.
• The complementary nature of the two businesses is expected to result in greater ADAS content per vehicle for Magna driven by the opportunity to offer more complete and integrated ADAS systems, inclusive of software.
• Strengthens Magna’s customer and geographic diversification in ADAS. The combined entity will have a well-diversified customer base. In addition, Veoneer’s business and footprint in Asia builds on Magna’s customer and geographic bases in this important region.
• Expect to realize annual run-rate synergies of approximately $100 million by 2024. These savings are incremental to Veoneer’s previously announced market adjustment initiatives.
• The all-cash transaction will allow Magna to maintain a strong balance sheet with an expected adjusted debt to adjusted EBITDA ratio slightly above the high end of Magna’s1.0 to 1.5 target range at closing.
Transaction Details And Timing
The transaction has been unanimously approved by the Veoneer and Magna boards of directors, and Veoneer’s board of directors unanimously recommends that Veoneer stockholders approve the proposed merger and merger agreement. In addition, Veoneer stockholders AMF, Cevian, AP4 and Alecta, which collectively represent approximately 40% of Veoneer’s outstanding shares of common stock, have either entered into support agreements with Magna or provided indications of support, pursuant to which they have agreed, among other things and subject to certain conditions, to vote their shares of Veoneer common stock in favor of the transaction. A special meeting of Veoneer’s stockholders will be convened in connection with the transaction as soon as practicable after the mailing to Veoneer’s stockholders of the proxy statement in connection with the merger. The transaction is expected to close near the end of 2021, subject to the approval of Veoneer’s stockholders, certain regulatory approvals and other customary closing conditions. The transaction is not subject to any financing conditions.
Citi serves as financial advisor and Sidley Austin LLP serves as legal counsel to Magna. Rothschild & Co and Morgan Stanley serve as financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP serves as legal counsel to Veoneer.