Qualcomm makes a multi-billion-dollar bet on cars

Qualcomm’s willingness to part with US$4.5 billion for automotive tech firm Veoneer provides the strongest statement of intent to date that it is looking to the driverless car for future growth.

The US chip maker has hammered out a deal that will see it and its investor partner take control of Veoneer for $37-per-share, which is a massive premium on its stock price before the battle for its new ownership began in July. Veoneer has spent the past couple of months juggling a pair of suitors and Qualcomm appears to have won out by throwing a hefty wedge of cash at the situation.

Vehicle technology specialist Magna got the ball rolling with a $31.25-per-share offer in late July and Veoneer was pretty happy with that, since its shares were then trading at below $20. But a fortnight later the company confirmed it had received a counter-proposal from Qualcomm, and ultimately Magna decided not to improve on its own bid. Thus, Qualcomm wins the race by paying what it admits is an 86% premium on Veoneer’s pre-Magna offer share price and 18% more than Magna’s offer.

Those figures clearly demonstrate how much Qualcomm wants to add this business to its portfolio, but more than that, they also highlight the growth potential this market offers. It’s fair to say that Qualcomm hasn’t dropped $4.5 billion for fun.

Actually, the full purchase price is not all Qualcomm’s responsibility. The firm has partnered with investment group SSW Partners on the deal. SSW will hand over the cash and then sell Veoneer’s core business, Arriver, to Qualcomm. The companies did not disclose the value of that particular part of the transaction. SSW will then seek out investors for the remainder of Veoneer, its Restraint Control Systems (RCS) and Active Safety businesses, that is.

Arriver is wholly owned by Veoneer, but was created at the start of this year in partnership with Qualcomm to house the firm’s Advanced Driver Assistance Systems (ADAS), collaborative and autonomous driving software and systems operations. Given their history, it makes sense for Qualcomm to become the unit’s new owner, something that was pointed out by Qualcomm’s boss.

“Qualcomm is the natural owner of Arriver,” said Cristiano Amon, president and CEO of Qualcomm. “By integrating these assets, Qualcomm accelerates its ability to deliver a leading and horizontal ADAS solution as part of its digital chassis platform,” he said. “We believe that this transaction and structure benefits both Qualcomm’s and Veoneer’s shareholders, positions all of Veoneer’s businesses for success and provides a compelling opportunity to customers and employees.”

Qualcomm said that on completion of the deal, sometime next year, it will incorporate Arriver’s Computer Vision, Drive Policy and Driver Assistance assets into its Snapdragon Ride ADAS solution, a move that will help it to provide an open and competitive ADAS platform for automakers and tier-1s at scale.

Qualcomm unveiled Snapdragon Ride at CES in early 2020, demonstrating the importance of autonomous driving to its strategic direction. Almost two years on and it is moving to augment the platform in a big way.