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Magna (MGA) to Enhance ADAS Portfolio on Veoneer Acquisition
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Magna International (MGA - Free Report) recently entered into an agreement to acquire Veoneer Inc. — an automotive-safety technology company — with a vision to expand its advanced driving assistance systems (ADAS).
Per the agreement, Magna will acquire all of the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing an equity value of $3.8 billion and an enterprise value of $3.3 billion.
The transaction has been unanimously approved by the boards of Magna and Veoneer. The deal is expected to complete by the end of 2021, subject to certain regulatory approvals.
Based in Stockholm, Sweden, Veoneer designs, develops and manufactures innovative software, hardware and systems for occupant protection, ADAS, collaborative and automated driving. The autotech company spun off from longtime safety equipment supplier Autoliv Inc. (ALV - Free Report) in 2018, and offers radar systems, brakes, driver monitoring equipment, restraint controls and driver assist software.
Expected Synergy From the Buyout
Per the agreement, Veoneer will be integrated into Magna’s ADAS portfolio in an attempt to expand the same.
The buyout will bolster Magna’s existing strengths, as well as make the company’s ADAS business a global leader with augmented capabilities, and enhanced engineering and software competencies.
Veoneer’s complementary technology and customer base make it a perfect fit for Magna’s ADAS business. The acquisition is expected to result in greater ADAS content per vehicle for Magna and fortify the Canadian auto supplier’s global skill base.
This purchase broadens Magna’s ADAS business and provides access to new customers and regions, including in Asia. Thus, the combined entity is expected to have a have a well-diversified customer base, and be an industry leader in active safety solutions, positioning itself well for the transition toward greater levels of autonomy.
The takeover will help Magna achieve annual cost savings of roughly $100 million by 2024. In fact, the transaction is funded entirely through cash, enabling Magna to maintain a healthy balance sheet at closing, with an expected adjusted debt to adjusted EBITDA ratio slightly more than the upper end of Magna’s target range of 1-1.5.
The acquisition is in sync with Magna’s strategy to accelerate investments in high-growth areas with a goal to capitalize on the evolving ADAS market.
Veoneer is equally thrilled about the buyout. Joining hands with Magna will allow the combined entity to become a full-systems ADAS supplier, which will benefit both supplier partners and ultimate consumers. Moreover, it will deliver outstanding value to Veoneer stockholders through an alluring premium and provide employees the opportunity to work with one of the most accomplished suppliers in the auto space.
Post completion of the transaction, Veoneer will be integrated into Magna’s electronics operating unit. The combined business will take leverage of both organizations’ automotive customers, suppliers and technology partners to develop superior quality products. Magna will also acquire Veoneer’s dominant position in restraint control systems, and expects to run Veoneer’s ArriverTM sensor perception and drive policy software division as an independent business unit.
Image: Bigstock
Magna (MGA) to Enhance ADAS Portfolio on Veoneer Acquisition
Magna International (MGA - Free Report) recently entered into an agreement to acquire Veoneer Inc. — an automotive-safety technology company — with a vision to expand its advanced driving assistance systems (ADAS).
Per the agreement, Magna will acquire all of the issued and outstanding shares of Veoneer for $31.25 per share in cash, representing an equity value of $3.8 billion and an enterprise value of $3.3 billion.
The transaction has been unanimously approved by the boards of Magna and Veoneer. The deal is expected to complete by the end of 2021, subject to certain regulatory approvals.
Based in Stockholm, Sweden, Veoneer designs, develops and manufactures innovative software, hardware and systems for occupant protection, ADAS, collaborative and automated driving. The autotech company spun off from longtime safety equipment supplier Autoliv Inc. (ALV - Free Report) in 2018, and offers radar systems, brakes, driver monitoring equipment, restraint controls and driver assist software.
Expected Synergy From the Buyout
Per the agreement, Veoneer will be integrated into Magna’s ADAS portfolio in an attempt to expand the same.
The buyout will bolster Magna’s existing strengths, as well as make the company’s ADAS business a global leader with augmented capabilities, and enhanced engineering and software competencies.
Veoneer’s complementary technology and customer base make it a perfect fit for Magna’s ADAS business. The acquisition is expected to result in greater ADAS content per vehicle for Magna and fortify the Canadian auto supplier’s global skill base.
This purchase broadens Magna’s ADAS business and provides access to new customers and regions, including in Asia. Thus, the combined entity is expected to have a have a well-diversified customer base, and be an industry leader in active safety solutions, positioning itself well for the transition toward greater levels of autonomy.
The takeover will help Magna achieve annual cost savings of roughly $100 million by 2024. In fact, the transaction is funded entirely through cash, enabling Magna to maintain a healthy balance sheet at closing, with an expected adjusted debt to adjusted EBITDA ratio slightly more than the upper end of Magna’s target range of 1-1.5.
The acquisition is in sync with Magna’s strategy to accelerate investments in high-growth areas with a goal to capitalize on the evolving ADAS market.
Veoneer is equally thrilled about the buyout. Joining hands with Magna will allow the combined entity to become a full-systems ADAS supplier, which will benefit both supplier partners and ultimate consumers. Moreover, it will deliver outstanding value to Veoneer stockholders through an alluring premium and provide employees the opportunity to work with one of the most accomplished suppliers in the auto space.
Post completion of the transaction, Veoneer will be integrated into Magna’s electronics operating unit. The combined business will take leverage of both organizations’ automotive customers, suppliers and technology partners to develop superior quality products. Magna will also acquire Veoneer’s dominant position in restraint control systems, and expects to run Veoneer’s ArriverTM sensor perception and drive policy software division as an independent business unit.
Magna, closest peer of which is Lear Corporation (LEA - Free Report) , currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, shares of the company have appreciated 76% in the past year, while the industry has depreciated 4.1%.
Image Source: Zacks Investment Research