Today, investors in Veoneer (NYSE:VNE) and VNE stock are seeing impressive gains. The automotive technology company saw its shares soar nearly 30% today on very heavy volume.
This move comes amid investor interest in the automotive technology space. The company produces advanced safety gear for autonomous and semi-autonomous vehicles, such as lidar and radar sensors. These technologies have become one of the focal points of investors, as these drive the technological improvements in vehicles automakers require to stay ahead of the competition.
In July, auto parts giant and vehicle manufacturer Magna International (NYSE:MGA) thought so too. Magna offered $31.25 per share for Veoneer in a deal that amounted to a $3.8 billion offer for the company. This move would position Magna well in the race to provide auto makers with the best technology possible for their new vehicles.
However, today, a competing bid has come in from Qualcomm (NASDAQ:QCOM), topping Magna’s bid. Let’s dive into the details of this bid and why it’s significant for this sector.
Qualcomm Bid Boosts VNE Stock
Today, Qualcomm announced the chip maker has made a rival bid of $4.6 billion to acquire Veoneer. This amounts to $37 per share for the lidar and radar maker. Currently, shares of VNE stock are trading well above the $37 level, with investors seemingly pricing in a counteroffer from Magna and a potential bidding war.
Indeed, the value that companies like Veoneer provide are coming on full display right now. It appears the market is now viewing vehicles as the next technological frontier. Given the fact that Qualcomm, a chip maker, is in the market for advance lidar and radar systems says a lot about how the traditional auto sector is being viewed in the broader context of the technology space.
The ability for Magna, a company with a $25 billion market cap, to increase its offer substantially above the $4.6 billion offered by Qualcomm, a much larger technology giant, remains to be seen. Accordingly, perhaps today’s exuberance with VNE stock is overdone.
That said, it’s possible another bidder could come out of nowhere as Qualcomm has. Magna’s share price rose on the announced offer, suggesting investors think Magna’s out of the bidding. However, this turn of events certainly casts a positive light on VNE stock. Accordingly, Veoneer is a company that’s found its way on my watch list today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
