- Veoneer's complementary products and capabilities
strengthen and broaden Magna's ADAS portfolio and industry
position
- Transaction adds significant engineering and software
expertise, including in sensor perception and drive policy
software
- Enhances Magna's ADAS systems capabilities and feature
functionality
AURORA, Ontario and
STOCKHOLM, July 23, 2021 /PRNewswire/ -- Magna
International Inc. (TSX: MG; NYSE: MGA) and Veoneer, Inc. (NYSE:
VNE and 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 a total 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
ArriverTM 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'scomplementary 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 and CEO said: "This is a compelling transaction for all
our 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 ArriverTM
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's1.0 to 1.5 target range
at closing.
TRANSACTION DETAILS AND TIMING
The 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 CALL
Magna will hold a conference call for interested analysts and
Magna shareholders to review the acquisition Friday morning at
07:00 am 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.
MAGNA CONTACTS
Investor
Louis Tonelli, Vice President,
Investor Relations
louis.tonelli@magna.com, (+1) 905.726.7035
Media
Tracy Fuerst, Vice President,
Corporate Communications & PR
tracy.fuerst@magna.com, (+1) 248.631.7004
VEONEER CONTACTS
Thomas Jönsson, EVP Communications & IR,
thomas.jonsson@veoneer.com, tel +46 (0)8 527 762
27
Magna 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 centers 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 Statements
Certain 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.
Veoneer, 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 It
This 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 thomas.jonsson@veoneer.com.
Participants in the Solicitation
Veoneer 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 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 expectations 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; and (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.
This report is information that Veoneer, Inc. is obliged to make
public pursuant to the EU Market Abuse Regulation. The information
was submitted for publication, through the agency of the EVP
Communications and IR set out above, at 02:10 CET on Friday July 23, 2021.
CONTACT:
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