Qualcomm, SSW Partners to acquire Veoneer for $37 per share

Qualcomm and SSW Partners plan to acquire Veoneer for $37 per share, or roughly $4.5 billion. CNBC’s "Squawk on the Street" discuss. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Qualcomm said on Monday that it will purchase part of auto components supplier Veoneer in a transaction valued at $4.5 billion, as the chipmaker dives deeper into the car market.

Qualcomm is teaming up with investment firm SSW Partners to complete the transaction. Qualcomm will acquire Veoneer’s Arriver business, which is focused on computer vision, drive policy and driver assist, according to a press release. SSW will retain the rest of Veoneer, looking to sell it in pieces.

Prior to Monday’s deal, Veoneer had agreed in July to be bought by Magna International for $31.25 a share. Qualcomm and SSW are paying $37 a share, beating out the prior bid. The purchase price is 86% higher than Veoneer’s share price before the Magna announcement, according to Qualcomm.

Veoneer will pay Magna a termination fee of $110 million, Magna said in a statement.

The deal underscores the importance of the auto market to Qualcomm and other technology companies as cars include more computer parts such as sensors and processors. Tech vendors including Qualcomm are investing heavily in advanced driver-assistance systems, or ADAS, which allow cars to automatically stay in a highway lane, or brake ahead of time to avoid collisions. Intel’s Mobileye also focuses on ADAS systems.

ADAS features are not for full autonomous driving but rely on many of the same sensors and algorithms. Advances in ADAS can also apply to self-driving cars.

Qualcomm said it plans to integrate the Arriver software into its Snapdragon Ride platform. Arriver was created initially through a partnership between Veoneer and Qualcomm last year. Qualcomm CEO Cristiano Amon called his company the “natural owner” of the Arriver assets, which are mostly software and can ultimately run on Qualcomm chips.

Qualcomm executives say Snapdragon Ride is more open than rival products, allowing auto makers and their suppliers to poke at its code and build their own features on top of Qualcomm’s chips and software.

Auto makers like GM are introducing new software platforms that will update automatically over wireless connections and aim to entice customers to pay for services like hands-free driving.

While Qualcomm’s automotive business is a small part of the company, it’s growing quickly. In the most recent quarter, Qualcomm reported $253 million in auto revenue, compared to $3.86 billion from handset technology. The auto business grew 83% from the same period last year.

The price Qualcomm will ultimately pay depends on what happens with the rest of the assets that SSW will own. Qualcomm expects the transaction to close next year.
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