Verizon buys Fleetmatics for USD 2.4 billion in cash to step up in Telematics. This is the carrier’s second deal in recent weeks to strengthen its small but fast growing business of connecting smart devices and sensors to cloud software over wireless networks.
Fleetmatics is a telematics company which is based out of Dublin, Ireland. The purpose of buying Fleetmatics will be for Verizon to build out the products that it offers to enterprises in the areas of logistics and workforces that are on the move.
The deal will make Fleetmatics a part of Verizon Telematics, a subsidiary of the telco that will focus on fleet management, mobile workforce solutions and Internet of Things (IoT). It’s part of a short spate of acquisitions that Verizon has been making lately to expand those operations. The purchase comes just a month after Verizon bought startup Telogis, which also offers fleet-tracking cloud software and has partnerships with truck makers like General Motors, Mack, and Hino.
Fleetmatics was one of the few public cloud-software companies to show consistent growth in revenue and profits at the same time. Its services to track trucks to improve safety and performance as well as providing scheduling and dispatching apps have been in high demand in an industry that typically moves slowly on new technology.
The latest deal came together quickly, with senior executives beginning talks only in May, leading to board approvals last week, according to a Verizon Securities Filing. Fleetmatics is barred from trying to solicit another offer, but the deal doesn’t appear to include a substantial termination payment if a better offer happens to come along.
With its conventional wired telephone business shrinking and slow growth in wireless, Verizon is looking for new areas to add to its USD 132 billion of revenue. Along with the recent AOL and Yahoo acquisitions to build a consumer advertising business, Verizon has been looking for growth from the IoT market, where owning a huge communications network could be a foremost competitive benefit.
Still, the massive carrier has a way to go before its under USD 1 billion a year IoT unit starts to make a big impact. The Fleetmatics and Telogis additions “position the combined companies to become a leading provider of fleet and mobile workforce management solutions globally,” Andres Irlando, CEO of the Verizon Telematics unit, said in a statement.
Investors hoping to see significant growth overall at Verizon may have to wait for a few more acquisitions.