Qualcomm’s Automotive Ambitions Spur Curious Bid for Veoneer; No Change to $136 FVE

On Aug. 5, Qualcomm announced it submitted an all-cash offer to acquire advanced driver assistant systems pure-play Veoneer for $37 per share, or $4.6 billion in equity value. Narrow-moat Veoneer previously agreed to a buyout bid from Tier I auto-parts supplier Magna for $31.25 per share, or $3.8 billion in equity value. Although Qualcomm already boasts a promising automotive design win pipeline of $10 billion, management is primarily interested in Arriver, which is Veoneer’s dedicated software unit for the development of ADAS and autonomous driving systems. Arriver was formed in January 2021 as a collaboration between Veoneer and Qualcomm (100% owned by Veoneer). We think Qualcomm wants to integrate its Snapdragon Ride platform and 5G expertise with Arriver’s computer vision, drive policy, and other ADAS capabilities. Given Magna already partners with Mobileye, we surmise Qualcomm’s management could be concerned its partnership with Veoneer could be at risk if Magna acquires it. That said, we believe there are likely more synergies between Veoneer and Magna as opposed to Qualcomm. Shares of narrow moat Qualcomm were down about 1% upon the news but continue to trade above our unchanged fair value of $136.