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Veoneer Inc Ordinary Shares VNE

Rating as of

Morningstar’s Analysis

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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

Veoneer designs, develops, and makes safety electronics for the global automotive industry. Passive safety products include sensors, electronic control units, and software used to prepare seat belt pretensioners, and to deploy airbags in a collision. Active safety products include sensors, electronic control units, and software that enable advanced driver assistance systems, or ADAS, highly automated driving, or HAD, and autonomous driving, or AD. Roughly one-third of revenue comes from each of Europe, the Americas, and Asia. Daimler, Hyundai/Kia, Ford, Honda, and General Motors are the company’s five largest customers, accounting for 61% of 2020 revenue.

Contact
Klarabergsviadukten 70, Box 13089, Section C6
Stockholm, SE-103 02, Sweden
T +46 852776200
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 7,543