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Qualcomm’s Veoneer Takeover Move Shows Big Automotive Ambitions

The News: Qualcomm Incorporated (NASDAQ: QCOM) today announced it has submitted an offer to acquire Veoneer for $37 per share, in an all-cash transaction. Our offer has been approved by Qualcomm’s Board of Directors, does not require Qualcomm stockholder approval, and has no financing conditions. Read the full press release in Qualcomm’s newsroom. 

Analyst Take: This morning, Qualcomm announced an aggressive move, furthering its ambitions in the Automotive space as the company seeks to attract the support of Veoneer investors despite its recent decision to accept a lower bid via tier 1 Canadian-based tier 1 automotive supplier, Magna. 

While Veoneer isn’t a household name, the company has an innovative breadth of offerings in the connected vehicle space, with Qualcomm likely most interested in its ADAS (advanced driver-assistance systems) that would instantly scale Qualcomm’s automotive offering. 

Qualcomm's Veoneer Takeover Move Shows Big Automotive Ambition
Image: Veoneer
It isn’t immediately clear if Qualcomm would plan to utilize the full stack of automotive technologies developed by Veoneer, but I am confident that the advanced ADAS capabilities are the primary focal points of this deal. Qualcomm could then choose to divest certain assets to offset the deal size.
A Deeper Dive: Why is Qualcomm After Veoneer?
Qualcomm’s decision to pursue Veoneer in a deal that will pay nearly a billion dollars more than its recent acquisition announcement shows Qualcomm’s massive commitment to expanding its automotive business.
While its automotive business is currently a smaller segment for the company, it has seen fast and significant growth, achieving +80% in the last quarter with a multi-billion dollar design pipeline indicating a much more substantial contribution to Qualcomm’s long term top and bottom line growth.
If Qualcomm can successfully sway Veonoeer shareholders to accept Qualcomm’s offer, which comes in at an 18%+ premium over the Magna deal and represents and 85+% premium to the share price on 7/22, the last full trading day prior to the Magna offer becoming public, Qualcomm will instantly see its current automotive business expand from its current focus on infotainment, telematics, and instrument cluster to being able to deliver ADAS solutions and more.
I believe this deal puts Qualcomm in the driver’s seat to drive substantial growth in the automotive space. Its current design pipeline expands and QCOM can strategically align with automotive manufacturers and tier one automotive suppliers to democratize next generation vehicle technologies–enabling greater competition to the likes of Tesla, which has been able to differentiate from the market on its complete technology package.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice. Neither the Author or Futurum Research holds any positions in any companies mentioned in this article.

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Image Credit: Qualcomm

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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