US communications giant Verizon is to buy the Dublin-based GPS vehicle tracking company Fleetmatics Group for about $2.4 billion (€2.1 billion) in cash, 12 years after it was founded as an SME in Dublin.
Verizon will pay $60 per Fleetmatics share, a premium of about 40 per cent to Friday’s close. The acquisition reflects the major development of Fleetmatics since it was founded in Dublin in 2004, with just 10 employees and will lead to significant payout for shareholders, including mainly US investment funds.
The company’s core business is software which allows companies to manage their haulage fleets and other mobile operations. Founder Peter Mitchell remains as chief technology officer, with a shareholding worth over $5.7 million at the offer price.
“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,” said Andrés Irlando, CEO of Verizon Telematics.
Verizon is rapidly expanding in this area, recently buying US company Telogis – which operates in a similar field – to add to its own operations. As the market for smartphones and mobile devices gets saturated, Verizon and its biggest rival, AT&T Inc, hope that connecting more objects to their networks will provide new revenue.
Tallaght headquarters
With about 1,200 employees worldwide, Fleetmatics has its headquarters in Tallaght, Dublin, where it employs about 200 people. Its North American headquarters is in Waltham, Massachusetts. Its main technology development work has taken place in Ireland and it has recently announced an expansion in this area.
Fleetmatics was founded in 2004 with the merger of Irish technology firms WebSoft and Moviltec, initially employing 10 people in a small office. After years of strong growth, and with a focus on the US market in particular, it floated on the New York Stock Exchange in 2012, valuing the business at around $100 million.
At that stage a number of major international investment houses became involved. Fleetmatics serves about 737,000 vehicles under subscription and about 37,000 customers of all sizes throughout Australia, Canada, France, Ireland, Italy, Mexico, the Netherlands, the United Kingdom, and the United States. The company reported total revenue of $284.8 million in 2015, an increase of 23 per cent compared to $231.6 million in 2014.
The company's chief executive is American Jim Travers, with Mr Mitchell the remaining Irish employee at a senior level. Liam Young, a veteran of the telecoms industry here and best known as chief executive of Conduit, has been on the board since 2012. His shareholding, according to recent company filings, is worth just under $1 million at the offer price.
Fleet management
The company's web-based solutions provide fleet operators with full oversight of vehicle location, fuel usage, speed and mileage, and other information about their mobile workforce, helping them to reduce operating costs, as well as increase revenue. Among its more recent deals is a four-year agreement with An Post to support more than 900 vehicles.
“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,” said Mr Travers.
Fleematics shares jumped by 39 per cent to $59.60, just under the offer price, in trading in New York. The acquisition is subject to customary regulatory approvals and is expected to close in the fourth quarter of 2016.
