VNE Veoneer Inc

Other Information

Equity Research Analysts’ Future Price Targets

The two paragraphs under the subsection entitled “The Merger Agreement—Opinions of Veoneer’s Financial Advisors—Morgan Stanley & Co. LLC— Other Information—Equity Research Analysts’ Future Price Targets” on page 63 of the proxy statement are amended and restated as follows:

 

Morgan Stanley noted certain future public market trading price targets for Veoneer Common Stock prepared and published by equity research analysts prior to July 22, 2021 (the last full unaffected trading day prior to the announcement of the Magna Merger Agreement). These targets reflected each analyst’s estimate of the future public market trading price of Veoneer Common Stock. The range of undiscounted analyst price targets for the Veoneer Common Stock was $17 to $38 per share as of various dates ranging from April 28, 2021 to July 15, 2021.  The following is a list of each future public market trading price target noted by Morgan Stanley, including the institution of the equity research analyst publishing the public market trading price target and the date of the latest update of the public market trading price target as of July 21, 2021:

 

 

(1) Price target has been converted from SEK to USD

 

The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for Veoneer Common Stock, and these estimates are subject to uncertainties, including the future financial performance of Veoneer and future financial market conditions.

Rothschild & Co US Inc.

Summary of Rothschild & Co’s Financial Analyses

Selected Public Company Analysis

The first paragraph on page 68 of the proxy statement under the subsection entitled “The Merger Agreement—Opinions of Veoneer’s Financial Advisors— Rothschild & Co US Inc.— Summary of Rothschild & Co’s Financial Analyses— Selected Public Company Analysis” is amended and supplemented by deleting the following strikethrough text and adding the following bolded and underlined text:

Rothschild & Co performed a selected public companies analysis in order to derive an implied per share equity value reference range for Veoneer from the market value and trading multiples of other publicly traded companies and then compared this implied per share equity value reference range with the Merger Consideration provided for in the Merger Agreement. Rothschild & Co selected the publicly traded companies that Rothschild & Co deemed most relevant to consider in relation to Veoneer, based on its professional judgment and experience, because they are public companies that operate as automotive technology suppliers or diversified automotive suppliers with exposure to electronics/electrical (“E/E”) systems and that have business models, financial performance or other characteristics that for purposes of this analysis Rothschild & Co considered similar to the operations of one or more of the business lines of Veoneer. However, because of inherent differences in businesses, operations and prospects, none of the publicly traded companies listed below are directly comparable to Veoneer. The publicly traded companies selected by Rothschild & Co for purposes of this analysis included the following companies, which Rothschild & Co refers to, collectively, as the selected public companies:

Automotive Technology Suppliers:

Diversified Automotive Suppliers with E/E Exposure:

For purposes of its analysis of the selected public companies, Rothschild & Co (i) reviewed, among other things, for each of the selected public companies, the per share stock price of such selected public companies as of October 1, 2021, public filings made by such selected public companies for certain historical financial information and data for such selected public companies that Rothschild & Co obtained from broker research and, where applicable, adjusted to account for certain events such as acquisitions and divestitures, (ii) calculated the EV of each of the selected public companies as a multiple of the estimated sales for calendarized years ending December 31, 2021, and December 31, 2022, which multiple Rothschild & Co refers to as “EV/Sales,.” and (iii) calculated the EV of each of the selected companies as a multiple of the estimated EBITDA for calendarized years ending December 31, 2021, and December 31, 2022, which multiple Rothschild & Co refers to as “EV/EBITDA”.

EV was calculated as fully diluted market value based on per share stock prices plus, with respect to each of the selected public companies, such company’s most recently disclosed net debt and other adjustments or with respect to Veoneer, net debt cash of $509 million as of June 30, 2021, as provided and approved for Rothschild & Co’s use by the management of Veoneer.  “EBITDA” of a company for any given period means the earnings before interest, taxes, depreciation and amortization of such company during such period.

The results of Rothschild & Co’s review of the EV/Sales and EV/EBITDA multiples are summarized in the chart below:

Based on the 2021E EV/Sales and 2022E EV/Sales multiples calculated above, Rothschild & Co’s analysis of the relevant metrics of each of the selected public companies and on Rothschild & Co’s professional judgment, Rothschild & Co applied an illustrative range of EV/Sales of 1.10x to 1.50x and 1.00x to 1.35x to the estimated sales of Veoneer for fiscal years 2021 and 2022, respectively, each as provided in the Company Projections, to reach a range of implied EVs for Veoneer for fiscal years 2021 and 2022. To calculate implied equity values, Rothschild & Co then subtracted from added to such implied EVs the amount $509 million of net debt cash of Veoneer as of June 30, 2021, as provided and approved for Rothschild & Co’s use by the management of Veoneer. Rothschild & Co then divided such implied equity values by the number of fully diluted shares of Veoneer Common Stock, as provided and approved for Rothschild & Co’s use by the management of Veoneer, to reach the following reference ranges of implied value per share of Veoneer Common Stock, rounded to the nearest $0.25, as compared to the Merger Consideration:

Selected Precedent Transactions Analysis

The first paragraph on page 70 of the proxy statement under the subsection entitled “The Merger Agreement—Opinions of Veoneer’s Financial Advisors— Rothschild & Co US Inc.— Summary of Rothschild & Co’s Financial Analyses— Selected Precedent Transactions Analysis” is amended and supplemented by deleting the following strikethrough text and adding the following bolded and underlined text:

Rothschild & Co performed a selected precedent transactions analysis in order to derive an implied per share equity value reference range for Veoneer from enterprise value multiples in merger or acquisition transactions involving other companies that occurred since 2015 and then compared this implied per share equity value reference range with the Merger Consideration provided for in the Merger Agreement. Using publicly available information, Rothschild & Co analyzed the enterprise value multiples in the fourteen (14) selected transactions listed in the table below, selected based on its professional judgment and experience and involving target companies that are automotive technology suppliers or diversified automotive suppliers with exposure to E/E systems that generally reflected business models, financial performance or other similar characteristics similar to Veoneer’s business operations.

Based on its professional judgment and experience, Rothschild & Co deemed these transactions relevant to consider in relation to Veoneer and the Merger Agreement. No company, business or transaction used in this analysis is identical or directly comparable to Veoneer or the Merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which Veoneer or the Merger was compared.

For purposes of this analysis, Rothschild & Co calculated the EV/Sales and EV/EBITDA of the target company during the 12-month period (“LTM”) ending closest to the date of announcement of the transaction for which such information was publicly available. For companies where LTM financial information was not available, multiples were calculated using the annual sales of the target company.

Based on the EV/LTM Sales multiple calculated for the selected transactions and on Rothschild & Co’s professional judgment, Rothschild & Co applied an illustrative range of EV/LTM Sales of 1.30x to 2.00x to the estimated sales of Veoneer for fiscal year 2021, as provided in the Company Projections, to reach a range of implied EVs for Veoneer. To calculate implied equity values, Rothschild & Co then subtracted from added to such implied EVs the $509 million amount of net debt cash of Veoneer as of June 30, 2021, as provided and approved for Rothschild & Co’s use by the management of Veoneer. Rothschild & Co then divided such implied equity values by the number of fully diluted shares of Veoneer Common Stock, as provided and approved for Rothschild & Co’s use by the management of Veoneer, to reach the following reference range of implied value per share of Veoneer Common Stock, rounded to the nearest $0.25, as compared to the Merger Consideration:

Discounted Cash Flow Analysis

The first paragraph on page 71 of the proxy statement under the subsection entitled “The Merger Agreement—Opinions of Veoneer’s Financial Advisors— Rothschild & Co US Inc.— Summary of Rothschild & Co’s Financial Analyses— Discounted Cash Flow Analysis” is amended and supplemented by deleting the following strikethrough text and adding the following bolded and underlined text:

Rothschild & Co performed a discounted cash flow (“DCF”) analysis for Veoneer in order to derive an implied per share equity value reference range for the entire Company if it were to remain an independent public company, and then compared this implied per share equity value reference range with the Merger Consideration provided for in the Merger Agreement. In this analysis, Rothschild & Co calculated a range of implied EVs by adding (i) the estimated unlevered, after-tax free cash flows that Veoneer was forecasted to generate for the ten- (10) year period from the end of fiscal year 2021 through the end of fiscal year 2030 and for the fifteen- (15) year period through the end of fiscal year 2035 based on the Company Projections provided by the management of Veoneer, respectively, after the application of a range of illustrative discount rates, which were based on the estimated weighted average cost of capital (“WACC”) for Veoneer to (ii) the terminal value of Veoneer, after the application of a range of illustrative discount rates based on the estimated WACC for Veoneer. Rothschild & Co estimated the terminal value of Veoneer by applying an illustrative range of growth rates in perpetuity of one and a half percent (1.5%) to two and a half percent (2.5%), which Rothschild & Co selected using its experience and professional judgment, to the estimated unlevered after-tax free cash flows for the terminal period.

Unlevered, after-tax free cash flows for the terminal period were calculated as net operating profit after taxes (“NOPAT”) after application of the illustrative range of growth rates described above, less increases in net working capital, plus depreciation and amortization, less capital expenditures. Rothschild & Co used the mid-year discounting convention and applied a range of illustrative discount rates of ten and a half percent (10.5%) to twelve and a half percent (12.5%), based on an estimated WACC of eleven and a half percent (11.5%), which Rothschild & Co calculated using the traditional capital asset pricing model (“CAPM”).

Rothschild & Co calculated a range of implied equity values for Veoneer by subtracted from adding to the range of implied EVs the $509 million amount of Veoneer’s net debt cash as of June 30, 2021, as provided and approved for Rothschild & Co’s use by the management of Veoneer. Rothschild & Co then divided the ranges of implied equity values for Veoneer by the number of fully diluted outstanding shares of Veoneer Common Stock, as provided and approved for Rothschild & Co’s use by the management of Veoneer. These analyses indicated the following reference ranges of implied value per share of Veoneer Common Stock, rounded to the nearest $0.25, as compared to the Merger Consideration:

Other Factors

The fourth  paragraph on page 71 of the proxy statement under the subsection entitled “The Merger Agreement—Opinions of Veoneer’s Financial Advisors— Rothschild & Co US Inc.— Other Factors” is amended and supplemented by deleting the following strikethrough text and adding the following bolded and underlined text and inserting the table shown below:

In rendering its opinion, for illustrative purposes only and not relied upon in reaching its conclusion, Rothschild & Co also reviewed and considered other factors, including:

	Institution	Price Target ($)	Date
	DNB Markets	36.50(1)	8-Aug-21
	Jefferies	23.00	22-Jul-21
	Credit Suisse	37.00	18-Aug-21
	UBS	31.25	29-Jul-21
	Berenberg	31.25	26-Jul-21
	Pareto Securities	60.45(1)	25-Jul-21
	Kepler Cheuvreux	31.25	28-Jul-21
	Deutsche Bank Research	25.00	23-Jul-21
	Barclays	24.00	23-Jul-21
	RBC	31.25	5-Aug-21
	Cowen & Company	31.25	23-Jul-21
	ABG Sundal Collier	30.80(1)	5-Aug-21
	Carnegie	31.37(1)	5-Aug-21
	Danske Bank	37.00	3-Sep-21
	JP Morgan	24.00	23-Jul-21
	Mizuho Securities	37.00	1-Sep-21
	Nordea Equity Research	36.64(1)	6-Sep-21
	Evercore ISI	31.25	29-Jul-21
	Handelsbanken	35.00	25-Jul-21
	SEB Group	33.65(1)	8-Sep-21
	(1) Converted from SEK to USD at an exchange rate of 0.11 SEK/USD

 

Source: Veoneer | Note: Certain figures may be subject to rounding.

 

***

 

In addition, a 15-year version of the Company Projections was prepared using the following additional extrapolations:

 

Source: Veoneer | Note: Certain figures may be subject to rounding.

 

—END OF SUPPLEMENT TO DEFINITIVE PROXY STATEMENT—

This communication may be deemed to be solicitation material in connection with the proposed acquisition of Veoneer pursuant to a definitive Agreement and Plan of Merger (the “merger agreement”) between Veoneer, Qualcomm Incorporated (“Qualcomm”), SSW HoldCo LP (“SSW”) and SSW Merger Sub Corp, a Delaware corporation and a direct, wholly owned subsidiary of SSW. In connection with the proposed merger, Veoneer has filed 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.

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 Statements

This document may include “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements relating 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 or Qualcomm and SSW 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 does 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.