Blog Coverage Verizon on Acquisition Spree Buys Fleetmatics Group

LONDON, UK / ACCESSWIRE / August 2, 2016 / Active Wall St. blog coverage looks at the headline from Verizon Communications Inc. (NYSE: VZ) as the company logged into the automotive technology market with the acquisition of Fleetmatics Group PLC (NYSE: FLTX), a GPS vehicle tracking company, in an all cash $ 2.4 billion deal, on August 01, 2016. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Verizon Communications has agreed to pay $60 per share in cash which is at a premium of nearly 40% of the closing price of Fleetmatics Group’s stock on July 29, 2016. The deal is expected to close in the fourth quarter of 2016 subject to regulatory approvals.

How the deal pans out?

Dublin, Ireland headquartered FleetMatics Group was founded in 2004. The company which is a SaaS (software-as-a-service) based GPS tracking system provider to small and medium sized businesses to extract real-time data on vehicle activity was listed in New York Stock Exchange in 2012. The GPS based fleet management solutions assist fleet operators with crucial information like vehicle location, fuel usage, speed and mileage etc. As of today, Fleetmatics has more than 37000 customers and serviced 737,000 vehicles worldwide. The company generated total revenue of $284.8 million for the year 2015.

The deal will see Fleetmatics become a part of Verizon Telematics, a subsidiary of Verizon Communications Inc., which operates in the same space of fleet management, mobile workforce solutions, etc.

Verizon has taken the acquisition route to increase its competitive advantage in the telematics market. In June 2016, Verizon Telematics had announced that it plans to acquire Telogis, a California-based company that develops cloud-based solutions for mobile workforces, and specifically telematics, compliance and navigation software used by car companies like Ford Motor Co., Volvo, and General Motors Co. However, the financial terms of the deal were not disclosed. Verizon had also acquired Hughes Telematics in 2012.

Andrés Irlando, CEO of Verizon Telematics, said in an interview:

“FleetMatics is a market leader in North America — and increasingly internationally — and they’ve developed a wide-range of compelling SaaS-based products and solutions for small- and medium-sized businesses.”

Jim Travers, Chairman and CEO of Fleetmatics was enthused with the deal and said, “Verizon and FleetMatics share a vision that the SaaS-based fleet management solution market is extraordinarily large, lightly penetrated, global and fragmented which can best be attacked together with a world class product offering and the largest distribution channel in the industry,”

Advantage Verizon

Acquiring Fleetmatics will help Verizon Telematics increase its coverage in the niche commercial fleet management business. Verizon also gains access to a wider geographic market via clients of Fleetmatics which are located across Australia, Canada, France, Ireland, Italy, Mexico, the Netherlands, and the United Kingdom. Amongst the various divisions of Verizon, the telematics is the fastest growing one at 25% on y-o-y basis. Verizon Telematics sales for the first half of 2016 were $ 400 million. 

Stock Performance – Positive market reaction

Verizon Communications’ stock declined 1.64%, finishing the day at $54.50 on volume of 17.43 million shares. Since the beginning of the year, Verizon’s shares have advanced 21.84% and have been up 21.92% in the past year.

Following the announcement, Fleetmatics’ shares rocketed 38.71% to close the trading session at $59.59 on August 1, 2016, which was very close to the offer price of Verizon. The stock recorded a volume of 13.84 million shares, which was higher than its average volume of 413,800 shares. Fleetmatics’ shares are up 17.33% year to date.

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