Magna to Acquire Veoneer Active Safety Business for $1.525B in Cash

Author: Charles Gross | December 20, 2022 06:01am
Magna International Inc. (TSX:MG, NYSE:MGA) today announced it has entered into an agreement to acquire the Veoneer Active Safety business from SSW Partners for $1.525 billion in cash, subject to working capital and other customary purchase price adjustments. The combined business is projected to generate approximately $3 billion in sales in 2024, positioning Magna's ADAS business as a global leader. The acquisition builds on Magna's Advanced Driver Assistance Systems ("ADAS") strengths and positions the combined business with extensive products and capabilities to provide customers with a full suite of ADAS solutions.    The acquisition adds significant engineering resources and expands Magna's ADAS customer base and geographic diversification. ''This acquisition is consistent with our Go-Forward strategy to accelerate investment in high-growth areas, strengthens our ability to deliver systems solutions to meet customer needs, and positions Magna as a leading full-service ADAS provider,'' said Magna CEO Swamy Kotagiri. ''We plan to accelerate innovation by building on both organizations' strengths, including customers, suppliers, technology partners and employees. I am excited to welcome Veoneer Active Safety's talented employees into our global Magna family.'' TRANSACTION OVERVIEW Broadens Magna's ADAS sensor and full systems capabilities, including radar, camera, ADAS ECU and driver monitoring. Adds 2,200 engineers, including 1,800 for systems, software and sensor development. Veoneer Active Safety sales are projected to be approximately $1.1 billion in 2022 and growing to approximately $1.9 billion in 2024. Combined with Magna Electronics, the business is projected to have pro forma ADAS sales of approximately $1.8 billion in 2022, approximately $3 billion in 2024, and is expected to generate higher ADAS content per vehicle opportunities.    Magna expects to maintain a strong balance sheet with an adjusted debt to adjusted EBITDA ratio modestly above Magna's 1.0 to 1.5 target range by the end of 2023, with continued ample financial flexibility. Cash purchase price of $1.525 billion, subject to working capital and other customary purchase price adjustments. Transaction expected to close near mid-year 2023, subject to certain regulatory approvals and other customary closing conditions. Citi and Sidley Austin LLP serve as financial advisors and legal counsel to Magna, respectively.

Posted In: MGA TSX:MG