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.