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Chip Manufacturer Qualcomm Agrees To Buy Veoneer For $4.5 billion

By:
Hassan Maishera
Published: Oct 4, 2021, 19:48 UTC

Chip manufacturer Qualcomm has agreed to acquire part of auto components supplier Veoneer in a deal worth around $4.5 billion.

Qualcomm stock

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Qualcomm is diversifying its business to include automobiles and has made a crucial acquisition that could help it gain ground in the new market.

Qualcomm To Acquire Veoneer

Tech giant Qualcomm has agreed to acquire part of auto components supplier Veoneer. The acquisition deal is expected to be worth around $4.5 billion. Qualcomm has partnered with investment firm SSW Partners to ensure the deal goes through.

In a press release earlier today, Qualcomm said it would work with SSW Partners to acquire Veoneer’s Arriver business. Qualcomm will take over Arriver, the sector of the business that focuses on computer vision, drive policy, and driver assist. Furthermore, SSW will retain the rest of Veoneer and sell it in pieces.

Qualcomm said, “At closing, SSW Partners will acquire all of the outstanding capital stock of Veoneer, shortly after which it will sell the Arriver business to Qualcomm and retain Veoneer’s Tier-1 supplier businesses. SSW Partners will lead the process of finding strong, long-term strategic partners. This transaction structure facilitates the long-term success of all Veoneer’s businesses.”

The deal would see Qualcomm and SSW part with $37.00 per share in an all-cash transaction, bringing Veoneer to a total valuation of $4.5 billion. Veoneer had previously agreed to be acquired by Magna International for $31.25 a share. However, the deal will no longer be possible after Qualcomm and SSW offered $37 per share. As such, Veoneer will pay Magna a termination fee of $110 million.

Qualcomm Is Pushing Into The Automobile Sector

Qualcomm has been making efforts to enter the automobile market after losing ground in the mobile phone market. Google is set to ditch Qualcomm and start manufacturing its own smartphone processors before the end of the year. As such, Qualcomm has to look to other markets.

Last month, Qualcomm announced that it would be supplying a crucial computing chip in a new Renault SA electric vehicle. Qualcomm said the computing chip is for the digital dashboard on Renault’s latest electric vehicle.

QCOMM stock chart. Source: FXEMPIRE

With the acquisition of Veoneer, Qualcomm intends to become a bigger player in the automobile chip manufacturing industry. The shares of Qualcomm are down by more than 2% over the past 24 hours.

QCOM is currently trading at $126 per share, down by 2.01% since the US market opened. YTD, QCOM has underperformed, dropping from the $146 level at the start of the year to now trading above $126.

About the Author

Hassan is a Nigerian-based financial Journalist and cryptocurrency investor.

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