Qualcomm wants to buy Swedish auto tech company Veoneer for $37 a share, about $4.6 billion, according to a letter Qualcomm CEO Christiano Amon sent to the Veoneer board early Thursday.
Amon argued that the deal is a “compelling opportunity” for Veoneer as it is about 18% higher than the merger agreement it has reached with Magna International. The Magna agreement was first announced July 23.
Products Veoneer has made under the Arriver brand such as computer vision, drive policy and driver assistance along with Qualcomm’s Snapdragon Ride platform “will enable us to transform the ADAS segment,” Amon said. “We believe that together we are uniquely positioned to accelerate competition and create choice for the automotive ecosystem.”
A spokesperson for Veoneer, based in Stockholm, Sweden, said by email to Fierce Electronics, that Venoneer had received the Qualcomm offer and that its board of directors will evaluate it "consistent with its legal duties and the terms of the Magna merger agreement" reached on July 22. "The merger agreement remains in place," the spokesperson said.*
Buying Veoneer “would be a major opportunity” for Qualcomm, said analyst Jack Gold of J. Gold Associates. “It provides Qualcomm with a path to expand their markets and not be so dependent on the mobile device space. Automotive is a very large market to attack.”
Qualcomm has already taken steps to be a major player in automotive and the autonomous vehicle arena with its Snapdragon Ride platform. “They are trying to compete head on with Intel Mobileye, Nvidia and others who are also targeting the market area for growth,” Gold said.
Also, Qualcomm can leverage its leadership in 5G modem technology. “Autonomous vehicles don’t work very well without 5G level connectivity,” Gold argued.
Qualcomm is “playing catch up” to Intel and Nvidia, but it is still early in the auto game, which might not make its standing an issue, Gold said. “Qualcomm has demonstrated its ability to quickly integrated acquired tech,” he added. Also, the offer is “not a huge financial stretch” for Qualcomm to make.
Veoneer’s stock soared by 23% on news of the Thursday morning offer, while Qualcomm’s stock decline and then started to climb again by mid-morning.
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*This story was updated with the comment from Veoneer.