Verizon Communications Inc. (VZ: Quote) said Friday it has agreed to acquire telematics services provider Hughes Telematics, Inc. (HUTC.OB) for $12.00 per share in cash, or a total of $612 million.
Verizon noted that the deal will expand its capabilities in the automotive and fleet telematics marketplace as well as accelerate growth in key vertical segments, including emerging machine-to-machine services applications.
Hughes Telematics or HTI sells products that offer GPS tracking, communications and auto safety features. The company offers a portfolio of location-based services for consumers, manufacturers, fleets and dealers through two-way wireless connectivity.
The offer price represents a premium of 176 percent over Hughes' closing stock price on Thursday on the over-the-counter Bulletin Board.
HTI's board of directors has unanimously approved the transaction upon the recommendation of its special committee. In addition, holders of a majority of HTI's voting shares have also approved the transaction by a written consent.
The transaction was also unanimously approved by the directors of Verizon, present and voting. The deal is expected to close in the third quarter of 2012.
Verizon said it plans to retain the existing management team and operate the new unit as part of its Verizon Enterprise Solutions group. The business will continue to be based in Atlanta.
John Stratton, president of Verizon Enterprise Solutions said, "We expect M2M and telematics to drive significant growth for Verizon and we're taking an important step forward to accelerate solutions that will unlock more opportunities for existing and new HTI and Verizon customers."
Verizon noted that HTI will play a key role in its strategy to offer platform-based solutions tailored to specific industries.
Earlier this year, Verizon launched a new practice focused on developing telematics solutions that leverage the company's cloud and information technology, security, global IP network and communications, and mobility and M2M technology platforms.
HTI was founded in 2006 as a private company to provide connected solutions to the automotive industry.
In April 2009, HTI merged with Polaris Acquisition Corp., resulting in a publicly traded company on the OTC under the symbol 'HUTC'. Private equity firm Apollo Management provided HTI with the initial financial support.
HTI is the exclusive telematics service provider in the U.S. for all new vehicles sold by Mercedes-Benz USA, LLC.
In November 2011, HTI entered into a deal with Volkswagen Group of America, Inc., under which it will provide telematics services on an exclusive basis to specified Volkswagen brand vehicles sold or leased in the U.S. market, commencing in 2013.
For the first quarter ended March 31, 2012, HTI reported a net loss that narrowed to $14.35 million or $0.31 per share from $21.83 million or $0.64 per share in the year-ago period. Total revenues grew 38 percent to $22.07 million.
In Friday's regular session, VZ is trading at $41.44, down $0.20 or 0.48 percent on a volume of 115,405 shares.
HUTC.OB closed Thursday's trading at $4.35 on a volume of 200 shares.
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by RTT Staff Writer
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