Magna's US$3.8b Veoneer buy to drive car safety business

[AURORA] Canadian auto parts maker Magna International on Thursday agreed to buy Swedish rival Veoneer 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.

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 spin-off 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 customers and regions and save about US$100 million in annual costs by 2024, the company said.

REUTERS