To help further its exploit and expansion into the connected vehicle and fleet management market, Verizon Communications Inc would buy GPS vehicle tracking firm Fleetmatics Group Plc for about $2.4 billion in cash, the former announced recently.
A premium of about 40 percent to Fleetmatics’ closing price on Friday, $60 per share, will be paid by Verizon, the No. 1 U.S wireless company. The deal is expected to close in the fourth quarter of 2016.
While Verizon dipped 0.7 percent to $55.01, shares in Fleetmatics soared 39 percent to $59.60.
Information on their mobile workforce, including a driver’s behavioral data, fleet operators vehicle location, fuel usage and speed, mileage are shown and recorded by software that is developed by Fleetmatics, with North American headquarters in Waltham, Massachusetts.
Verizon and its biggest rival, AT&T Inc are putting their focus and are betting on connecting more objects to their networks which they hope will provide new revenue due to the fact that the market for smartphones and mobile devices is getting saturated.
Andrés Irlando, chief executive officer of Verizon Telematics, said in an interview that market share in the “highly fragmented and pretty under-penetrated” fleet and mobile workforce management business would be captured by Verizon following the acquisition helps of Fleetmatics.
Manufacturer of software to track commercial vehicles and navigation software used by automakers such as Ford Motor Co., California-based Telogis, was another very recent acquisition by Verizon Telematics. The deal, terms of which were not disclosed, was closed on Friday.
Its own fleet management service, called “Networkfleet” is also offered by Verizon Telematics.
“Both Telogis in the enterprise space and Fleetmatics in the (small- and medium-sized businesses) space have what’s widely considered best-in-class technology software platforms, as well as products and services,” Irlando said.
Irlando added that following eh acquisition, Verizon would be able to expand the global reach of its telematics business as Fleetmatics is present internationally in regions such as Western Europe and Australia.
Noting a rise of 21 percent from a year earlier, Fleetmatics posted revenue of $78.9 million for the first quarter in May.
The results from its telematics unit – including the revenues and any form of break up are not disclosed by Verizon. The sales from its larger “Internet of Things” business revenues essentially also include the business in its official reports and filings.
With a jump of 25 percent compared to the same period the previous year, this business segment of the company posted revenue of $205 million in the second quarter ended June 30, 2016. Connecting to the internet everything from household devices to industrial machines is the aim of this business segment of Verizon.
To make a push into the digital media and ad business, Verizon is buying Yahoo Inc’s core internet assets for $4.8 billion and announcement for the same was made last week and the deal is expected to add new revenue streams to for the company.
(Adapted from Reuters)