Chipmaker Qualcomm Inc. said on Thursday it had offered to acquire Swedish auto technology supplier Veoneer Inc. for $4.6 billion (all figures in USD), trumping an earlier bid by Canadian rival Magna International Inc.
Qualcomm hopes to grow its automotive chips business by creating open and competitive platforms for automakers along with Veoneer.
Magna had offered to buy rival Veoneer in July for about $3.8 billion in cash, looking to boost its efforts on building driver assistance tech geared toward autonomous vehicles.
U.S.-listed shares of Veoneer, which makes advanced driver assistance systems that add features ranging from collision warning to parking assist, rose 26 per cent to $39.25 in midday trading.
Veoneer's systems also collect data from cameras and radar to monitor surroundings, interpret the situation and take action.
Veoneer confirmed it received the nonbinding offer.
"Veoneer’s board of directors will evaluate the proposal from Qualcomm consistent with its legal duties and the terms of the Magna merger agreement," the company said. "On July 22, 2021, Veoneer announced that it entered into a definitive merger agreement, approved by Veoneer’s board of directors, with Magna International Inc. The merger agreement remains in place."
Magna declined to comment.
Qualcomm has been trying to expand its reach beyond smartphones. Automotive products accounted for around three per cent of chip sales last year and has been growing slowly in recent quarters.
CEO Cristiano Amon wrote in a letter that his company’s interest was “driven by” Arriver, Veoneer’s software unit working on helping cars perceive and make driving decisions.
“While we plan to explore a divestment of the non-Arriver assets to parties who are better positioned to grow these strong and stable businesses, neither the separation nor sale of the non-Arriver assets is a condition of our proposal,” Amon told Veoneer’s board. “Neither will be required to be completed prior to closing of the transaction.”
Qualcomm probably assumes it will be able to recover part of what it plans to pay for Veoneer through the sale of other assets, Joe Spak, an analyst at RBC Capital Markets, said in a report. Pairing Arriver with Qualcomm may make more sense than with Magna, he wrote, because it has operated as an independent business that is trying to sell products to Magna’s rivals.
“From here, the ball is back in MGA’s court,” Spak said, referring to Magna. “Will they stay disciplined or pay up or get in a bidding war with a larger company and balance sheet? From our perspective, competing with QCOM seems difficult.”
Qualcomm and Veoneer have said they plan to develop driver-assistance and autonomous systems integrating Veoneer’s perception technology and software with Qualcomm chips. The companies said in January they had presented their systems to automakers and top-tier suppliers and got positive feedback, though they didn’t announce any customers.
Reuters and Bloomberg contributed to this report.