VNE Stock Increases Over 55% Pre-Market: Why It Happened

By Amit Chowdhry ● Jul 23, 2021
  • The stock price of Veoneer Inc (NYSE: VNE) increased by over 55% pre-market. This is why it happened.

The stock price of Veoneer Inc (NYSE: VNE) increased by over 55% pre-market. Investors are responding to Magna International Inc. (TSX: MG; NYSE: MGA) and Veoneer today announcing that they have entered into a definitive merger agreement under which Magna will acquire Veoneer (a leader in automotive safety technology). 

Pursuant to the deal, Magna will acquire all of the issued and outstanding shares of Veoneer for $ 31.25 per share in cash, representing a total value of $ 3.8 billion, and an enterprise value of $ 3.3 billion, inclusive of Veoneer’s cash, net of debt and other debt-like items as of March 31, 2021. The deal builds on Magna’s strengths and positions the company’s advanced driver assistance systems (ADAS) business as a global leader with comprehensive capabilities. 

This acquisition also expands Magna’s ADAS business with major customers and provides access to new customers and regions, including in Asia. And Magna expects to operate Veoneer’s ArriverTM sensor perception and drive policy software platform as an independent business unit, consistent with Veoneer’s current practice. Plus Magna will buy Veoneer’s leading global position in restraint control systems.

Following the closing of the transaction, Veoneer is going to be combined with Magna’s existing ADAS business and integrated into Magna’s electronics operating unit. The combined business will build upon relationships with both organizations’ automotive customers, suppliers and technology partners to develop best-in-class products.

KEY QUOTES:

“Veoneer’scomplementary technology offerings, customer base, and geographic footprint make it an excellent fit with our ADAS business, and the acquisition strengthens our global engineering and software development talent base. We expect the combined entity to be an industry leader in active safety solutions, to enhance its position in complete ADAS systems, and to be well-positioned for the transition towards higher levels of autonomy. The acquisition is also consistent with our go-forward strategy to accelerate investment in high-growth areas.”

“We have a great deal of respect for Veoneer’s team around the world and their culture of innovation and creativity. We look forward to welcoming Veoneer’s employees into our global Magna family and are confident that together we will be able to achieve great results and move faster to address the growing ADAS market.”

— Magna CEO Swamy Kotagiri

“This is a compelling transaction for all our stakeholders. It will deliver significant and immediate value to Veoneer stockholders through an attractive premium to our trading price, and provide new opportunities for our employees to join one of the most capable suppliers in the mobility space. In addition, combining forces with Magna will allow the combined business to elevate its status as a full-systems ADAS supplier, which should benefit our customers, supplier partners and ultimately consumers.”

— Jan Carlson, Veoneer’s Chairman, President and CEO

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.