Magna International Inc. (TSX: MG; NYSE: MGA) and Veoneer (NYSE:
VNE; SSE: VNE SDB) today announced that they have entered into a
definitive merger agreement under which Magna will acquire Veoneer,
a leader in automotive safety technology. Pursuant to 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, inclusive of Veoneer’s cash, net of debt and other
debt-like items as of March 31, 2021.
The acquisition builds on Magna’s strengths and
positions the company’s advanced driver assistance systems (“ADAS”)
business as a global leader with comprehensive capabilities. The
acquisition also expands Magna’s ADAS business with major customers
and provides access to new customers and regions, including in
Asia. Magna expects to operate Veoneer’s Arriver™ sensor
perception and drive policy software platform as an independent
business unit, consistent with Veoneer’s current
practice. In addition, Magna will acquire Veoneer’s
leading global position in restraint control systems.
“Veoneer’s complementary 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,” said Magna CEO
Swamy Kotagiri. “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.”
Following the closing of the transaction,
Veoneer will 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.
Jan Carlson, Veoneer’s Chairman, President &
CEO said: “This is a compelling transaction for all 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.”
Mr. Kotagiri added, “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.”
HIGHLIGHTS OF THE
TRANSACTION
- Creates a global leader in ADAS
with pro forma 2020 ADAS sales of $1.2 billion and capabilities
across:
- Key component categories, including camera, radar, LiDAR and
domain controllers; and
- Software features/functions, including perception and drive
policy.
- Enhances Magna’s ADAS systems
capabilities and adds significant engineering and software
competency, including Arriver™ sensor perception and drive
policy software.
- The complementary nature of the two
businesses is expected to result in greater ADAS content per
vehicle for Magna driven by the opportunity to offer more complete
and integrated ADAS systems, inclusive of software.
- Strengthens Magna’s customer and
geographic diversification in ADAS. The combined entity will have a
well-diversified customer base. In addition, Veoneer’s business and
footprint in Asia builds on Magna‘s customer and geographic bases
in this important region.
- Expect to realize annual run-rate
synergies of approximately $100 million by 2024. These savings are
incremental to Veoneer’s previously announced market adjustment
initiatives.
- The all-cash transaction will allow
Magna to maintain a strong balance sheet with an expected adjusted
debt to adjusted EBITDA ratio slightly above the high end of
Magna’s 1.0 to 1.5 target range at closing.
TRANSACTION DETAILS AND
TIMINGThe transaction has been unanimously approved by the
Veoneer and Magna boards of directors, and Veoneer’s board of
directors unanimously recommends that Veoneer stockholders approve
the proposed merger and merger agreement. In addition, Veoneer
stockholders AMF, Cevian, AP4 and Alecta, which collectively
represent approximately 40% of Veoneer’s outstanding shares of
common stock, have either entered into support agreements with
Magna or provided indications of support, pursuant to which they
have agreed, among other things and subject to certain conditions,
to vote their shares of Veoneer common stock in favor of the
transaction. A special meeting of Veoneer’s stockholders will be
convened in connection with the transaction as soon as practicable
after the mailing to Veoneer’s stockholders of the proxy statement
in connection with the merger. The transaction is expected to close
near the end of 2021, subject to the approval of Veoneer’s
stockholders, certain regulatory approvals and other customary
closing conditions. The transaction is not subject to any financing
conditions.
Citi serves as financial advisor and Sidley
Austin LLP serves as legal counsel to Magna. Rothschild & Co
and Morgan Stanley serve as financial advisors and Skadden, Arps,
Slate, Meagher & Flom LLP serves as legal counsel to
Veoneer.
TRANSACTION CONFERENCE
CALLMagna will hold a conference call for interested
analysts and Magna shareholders to review the acquisition Friday
morning, July 23, 2021 at 7:00 a.m. EDT. The number to
use for this call is 1-800-582-0984. The number for overseas
callers is 1-416-981-9007. Please call in 10 minutes prior to the
call. Magna will also webcast the conference call at
www.magna.com.
A slide presentation accompanying the conference
call will be available on www.magna.com prior to the call.
For anyone unable to listen to the scheduled
call, the rebroadcast numbers are: North America 1-800-558-5253 and
overseas 1-416-626-4100 (reservation number is 21996365) and will
be available until July 30, 2021.
TAGSADAS, Veoneer, acquisition, Arriver™
MAGNA CONTACTSInvestorLouis Tonelli, Vice President, Investor
Relations louis.tonelli@magna.com, (+1) 905.726.7035
MediaTracy Fuerst, Vice President, Corporate Communications
& PRtracy.fuerst@magna.com, (+1) 248.761.7004
VEONEER CONTACTThomas Jönsson, EVP Communications &
IRthomas.jonsson@veoneer.com, +46.(0)8.527.762.27
ABOUT MAGNAMagna is more than
one of the world’s largest suppliers in the automotive space. We
are a mobility technology company with a global,
entrepreneurial-minded team of 158,000 employees and an
organizational structure designed to innovate like a startup. With
60+ years of expertise, and a systems approach to design,
engineering and manufacturing that touches nearly every aspect of
the vehicle, we are positioned to support advancing mobility in a
transforming industry. Our global network includes 347
manufacturing operations and 84 product development, engineering
and sales centres spanning 28 countries.
For further information about Magna [(NYSE: MGA;
TSX: MG)], please visit www.magna.com or follow us on Twitter
@MagnaInt.
MAGNA FORWARD-LOOKING
STATEMENTSCertain statements in this press release
constitute "forward-looking information" or "forward-looking
statements" (collectively, "forward-looking statements"). Any such
forward-looking statements are intended to provide information
about management's current expectations and plans and may not be
appropriate for other purposes. Forward-looking statements may
include financial and other projections, as well as statements
regarding our future plans, strategic objectives or economic
performance, or the assumptions underlying any of the foregoing,
and other statements that are not recitations of historical fact.
We use words such as "may", "would", "could", "should", "will",
"likely", "expect", "anticipate", "believe", "intend", "plan",
"aim", "forecast", "outlook", "project", "estimate", "target" and
similar expressions suggesting future outcomes or events to
identify forward-looking statements. The following table identifies
the material forward-looking statements contained in this document,
together with the material potential risks that we currently
believe could cause actual results to differ materially from such
forward-looking statements. Readers should also consider all of the
risk factors which follow below the table:
Material Forward-Looking Statement |
Material Potential Risks Related to Applicable
Forward-Looking Statement |
Strategic benefits of the transaction, including positioning in
complete ADAS system, as well as cameras, radar, domain
controllers, perception, motion control and mapping software, and
restraint control systems |
- Inherent merger and acquisitions risks, including:
unexpected costs, liabilities or delays; inability or failure
to achieve intended benefits from the transaction; and/or loss of
customers, suppliers, employees or other forms of business
disruption; failure to satisfy the conditions to completion of the
transaction, including approval of the merger by Veoneer’s
stockholders, and receipt of required governmental / regulatory
approvals on the terms or at the timing expected
- Acquisition integration risks, including the failure to realize
anticipated synergies
- Technology and innovation risks, including competitiveness of
acquired technologies
- Program launch risks
- Intense competition
|
Financial impact of transaction, including Sales diversification,
sales growth, content per vehicle opportunities, and expected
synergies |
- Same risks as above
- Shifts in consumer take rates
- Potential loss of material purchase order
|
Leverage ratio |
- Inherent merger and acquisitions risks, including:
unexpected costs, liabilities or delays; inability or failure
to achieve intended benefits from the transaction
- Credit ratings changes
|
Engineering & software resources and expertise |
- Acquisition integration risks
- Attraction/retention of skilled labour, including failure to
retain critical employees of either the acquired business or our
own existing business
- Labour disruption risk at acquired unionized facilities
|
Forward-looking statements are based on
information currently available to us and are based on assumptions
and analyses made by us in light of our experience and our
perception of historical trends, current conditions and expected
future developments, as well as other factors we believe are
appropriate in the circumstances. While we believe we have a
reasonable basis for making any such forward-looking statements,
they are not a guarantee of future performance or outcomes. In
addition to the factors in the table above, whether actual results
and developments conform to our expectations and predictions is
subject to a number of risks, assumptions and uncertainties, many
of which are beyond our control, and the effects of which can be
difficult to predict, including, without limitation:
Risks Related to the Automotive Industry
- economic cyclicality;
- regional production volume declines, including as a result of
the COVID-19 pandemic;
- intense competition;
- potential restrictions on free trade;
- trade disputes/tariffs;
Customer and Supplier Related Risks
- concentration of sales with six customers;
- OEM consolidation and cooperation;
- shifts in market shares among vehicles or vehicle
segments;
- shifts in consumer "take rates" for products we sell;
- quarterly sales fluctuations;
- potential loss of any material purchase orders;
- a deterioration in the financial condition of our supply base,
including as a result of the COVID-19 pandemic;
Manufacturing Operational Risks
- product and new facility launch risks;
- operational underperformance;
- restructuring costs;
- impairment charges;
- labour disruptions;
- COVID-19 shutdowns;
- supply disruptions, including with respect to semiconductor
chips;
- higher costs to mitigate supply disruptions;
- climate change risks;
- attraction/retention of skilled labour;
IT Security/Cybersecurity Risk
- IT/Cybersecurity breach;
- Product Cybersecurity breach;
|
Pricing Risks
- pricing risks between time of quote and start of
production;
- price concessions;
- commodity cost volatility;
- declines in scrap steel/aluminum prices;
Warranty / Recall Risks
- costs related to repair or replacement of defective products,
including due to a recall;
- warranty or recall costs that exceed warranty provision or
insurance coverage limits;
- product liability claims;
Other Business Risks
- our ability to consistently develop and commercialize
innovative products or processes;
- our changing business risk profile as a result of increased
investment in electrification and autonomous driving, including:
higher R&D and engineering costs, and challenges in quoting for
profitable returns on products for which we may not have
significant quoting experience;
- risks of conducting business in foreign markets;
- fluctuations in relative currency values;
- tax risks;
- reduced financial flexibility as a result of an economic
shock;
- changes in credit ratings assigned to us;
Legal, Regulatory and Other Risks
- antitrust risk;
- legal claims and/or regulatory actions against us; and
- changes in laws and regulations, including those related to
vehicle emissions.
|
In evaluating forward-looking statements or
forward-looking information, we caution readers not to place undue
reliance on any forward-looking statement. Additionally, readers
should specifically consider the various factors which could cause
actual events or results to differ materially from those indicated
by such forward-looking statements, including the risks,
assumptions and uncertainties above which are:
● discussed under the “Industry
Trends and Risks” heading of our Management’s Discussion and
Analysis; and ● set out in our Annual Information Form filed
with securities commissions in Canada, our annual report
on Form 40-F filed with the United States Securities and
Exchange Commission, and subsequent filings.
Readers should also consider discussion of our
risk mitigation activities with respect to certain risk factors,
which can be also found in our Annual Information Form.
ABOUT VEONEERVeoneer, Inc. is a
worldwide leader in automotive technology. Our purpose is to create
trust in mobility. We design, develop, and manufacture
state-of-the-art software, hardware and systems for occupant
protection, advanced driving assistance systems, and collaborative
and automated driving to OEMs globally. Headquartered in Stockholm,
Sweden, Veoneer has 7,500 employees in 11 countries. In 2020, sales
amounted to $1.37 billion. The Company is building on a heritage of
close to 70 years of automotive safety development. In 2018,
Veoneer became an independent, publicly traded company listed on
the New York Stock Exchange (NYSE: VNE) and on the Nasdaq Stockholm
(SSE: VNE SDB).
Additional Information and Where to Find
ItThis communication may be deemed to be solicitation
material in connection with the proposed acquisition of Veoneer by
Magna pursuant to a definitive Agreement and Plan of Merger (the
“merger agreement”) between Veoneer, Magna and 2486345 Delaware
Corporation (“Acquisition Sub”). In connection with the proposed
merger, Veoneer intends to file relevant materials with the United
States Securities and Exchange Commission (SEC), including a proxy
statement which will be mailed or otherwise disseminated to
Veoneer‘s stockholders. STOCKHOLDERS ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS OR SUPPLEMENTS
THERETO, AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH
THE SEC, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT VEONEER AND
THE PROPOSED MERGER. Stockholders may obtain free copies of the
definitive proxy statement, any amendments or supplements thereto
and other documents containing important information about Veoneer
or the proposed merger, once such documents are filed with the SEC,
free of charge at the SEC's website at www.sec.gov, or from Veoneer
at https://www.veoneer.com/en/investors or by directing a request
to Veoneer’s Investor Relations Department at
thomas.jonsson@veoneer.com.
Participants in the
SolicitationVeoneer and certain of its respective
directors and executive officers may be deemed to be "participants"
in the solicitation of proxies from Veoneer’s stockholders in
connection with the merger. Information about Veoneer’s directors
and executive officers and their direct or indirect interests, by
security holdings or otherwise, is set forth in Veoneer’s proxy
statement on Schedule 14A for its 2021 annual meeting of
stockholders filed with the SEC on March 29, 2021. To the extent
holdings of Veoneer’s securities by such participants (or the
identity of such participants) have changed, such information has
been or will be reflected on Statements of Change in Ownership on
Forms 3 and 4 subsequently filed with the SEC. Additional
information regarding the participants in the proxy solicitation
and a description of their direct or indirect interests, by
security holdings or otherwise, will be included in the definitive
proxy statement filed with the SEC regarding the proposed merger,
if and when it becomes available.
This document does not constitute a solicitation
of proxy, an offer to purchase or a solicitation of an offer to
sell any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Veoneer Forward-Looking
StatementsThis document may include “forward-looking
statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, including, without limitation,
statements related to the completion of the merger. In this
context, forward-looking statements often address expected future
business and financial performance and financial condition, and
often contain words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “seek,” “see,” “will,” “would,” “target,”
similar expressions, and variations or negatives of these words.
The reader is cautioned not to rely on these forward-looking
statements. Forward-looking statements by their nature address
matters that are, to different degrees, uncertain, such as
statements about the consummation of the proposed merger and the
anticipated benefits thereof. These and other forward-looking
statements are not guarantees of future results and are subject to
risks, uncertainties and assumptions that could cause actual
results to differ materially from those expressed in any
forward-looking statements, including the failure to consummate the
proposed merger or to make any filing or take other action required
to consummate such merger in a timely matter or at all. The
inclusion of such statements should not be regarded as a
representation that any plans, estimates or expectations will be
achieved. You should not place undue reliance on such statements.
Risks and uncertainties include, but are not limited to: (i) the
merger may involve unexpected costs, liabilities or delays; (ii)
the failure to satisfy the conditions to the consummation of the
transaction, including approval of the merger by Veoneer’s
stockholders and the receipt of certain governmental and regulatory
approvals on the terms or at the timing expected; (iii) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement; (iv)
operating costs, customer loss and business disruption (including,
without limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers) may be greater than
expected; (v) risks related to diverting management attention from
ongoing business operations; (vi) the business of Veoneer may
suffer as a result of uncertainty surrounding the merger or the
potential adverse changes to business relationships resulting from
the proposed merger; and (vii) the outcome of any legal proceedings
that may be instituted against Veoneer related to the merger
agreement or the transaction contemplated thereby. The foregoing
list of factors is not exhaustive. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on Veoneer’s financial condition,
results of operations, credit rating or liquidity.
You should carefully consider the foregoing
factors and the other risks and uncertainties relating to Veoneer
described in Veoneer’s Annual Report on Form 10-K for
the most recently completed fiscal year, and other reports and
documents filed by Veoneer from time to time with the SEC. These
filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Copies of these filings are available online at www.sec.gov.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and Veoneer assumes no obligation and do not intend to
update or revise these forward-looking statements, whether as a
result of new information, future events, or otherwise. Veoneer
does not give any assurance that it will achieve its
expectations.
A photo accompanying this announcement is
available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/6e02a7f2-2532-4610-b00c-46ee7e17e619
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