Skip to main content
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
// //

Magna International Inc. is buying the Swedish auto safety technology company Veoneer for US$3.8-billion in a drive to become a global leader in smart cars.

Stockholm-based Veoneer makes radar and cameras for cars, along with the software that runs self-parking and collision-avoidance capabilities, known as advanced driver assistance systems (ADAS). The company has 7,500 employees, including 1,700 software engineers.

Magna chief executive Swamy Kotagiri, who assumed the top job in January, said: “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 toward higher levels of autonomy.”

Story continues below advertisement

Mr. Kotagiri, 52, was previously responsible for innovation at Magna as its chief technology officer, and ran the Aurora, Ont.-based company’s ADAS division. In a conference call on Friday, he said ADAS is a $13-billion global market that is expected to triple in size over the next decade.

Market leaders in the ADAS sector include Ireland’s Aptiv PLC, India’s Bosch Ltd. and Germany’s Continental AG, all of which are far larger than Veoneer. Magna said acquiring Veoneer expands the Canadian company’s ties to Asian and European auto manufacturers.

“Growth in Veoneer’s end-markets (i.e., active safety) is expected to accelerate meaningfully in coming years,” Scotiabank analyst Mark Neville wrote in a report. He said while the takeover is “arguably expensive,” the growth potential in ADAS is clear and “the acquisition was clearly made with the future in mind.”

In 2018, Veoneer was spun out of Sweden’s Autoliv, the world’s largest producer of airbags and seatbelts. The company has lost money in each of the past three years. Three institutional investors who collectively own 40 per cent of Veoneer’s shares pledged to vote in favour of the Magna takeover, which is expected to close by the end of the year.

Magna is offering US$31.25 a share for Veoneer, a 57-per-cent premium to the company’s closing price on Thursday, prior to announcement of the transaction. However, Scotiabank’s Mr. Neville said the purchase price is just a 2-per-cent premium to the Swedish company’s 52-week high.

Magna traces its roots to a tool and die shop set up in the garage of founder Frank Stronach’s home, in 1957. It is now one of Canada’s largest industrial companies, with more than 170,000 employees at 350 factories in 28 countries.

Magna will fund the all-cash acquisition by borrowing, and the company said on Friday it will suspend share repurchases as it pays down debt. Magna expects to achieve US$100-million in annual cost savings once it fully integrates Veoneer’s operations.

Story continues below advertisement

Citi is Magna’s financial adviser and Sidley Austin LLP serves as legal counsel. Veoneer’s investment bankers are Rothschild & Co. and Morgan Stanley, while its lawyers are Skadden, Arps, Slate, Meagher & Flom LLP.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies