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Magna International Inc MG

Rating as of

Morningstar’s Analysis

Valuation
Currency in CAD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Veoneer Agrees To Be Acquired by Qualcomm and SSW Partners, Magna To Get Termination Fee

Richard Hilgert Senior Equity Analyst

Analyst Note

| Richard Hilgert |

Veoneer announced that it has entered into a definitive agreement to be acquired by Qualcomm and SSW Partners for $37 per share ($4.6 billion), which is 18.4% higher than Magna’s $31.25 ($3.8 billion) bid. SSW Partners will acquire Veoneer, sell Veoneer’s Arriver business unit to Qualcomm, and plans to find a strategic buyer for the restraint controls electronics and active safety businesses. Magna waived its four-day matching period and will receive a $110 million termination fee from Veoneer. While it is possible that another bidder might emerge, we think it is unlikely, given the hefty 86% premium (on the unaffected share price prior to announcements) Qualcomm and SSW Partners are paying. Neither do we see any difficulties in getting regulatory approval. We raised our Veoneer fair value estimate to $37 from $31.25 while our Magna fair value estimate was raised to $78 (pre-acquisition announcement level) from $73. Both stocks are 3-star rated, with each companies’ shares trading near our new fair value estimates.

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Company Profile

Business Description

Magna International prides itself on a highly entrepreneurial culture and a corporate constitution that outlines distribution of profits to various stakeholders. This automotive supplier's product groups include exteriors, interiors, seating, roof systems, body and chassis, powertrain, vision and electronic systems, closure systems, electric vehicle systems, tooling and engineering, and contracted vehicle assembly. Roughly half of Magna's revenue comes from North America while Europe accounts for approximately 44%.

Contact
337 Magna Drive
Aurora, ON, L4G 7K1, Canada
T +1 905 726-2462
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 158,000