On Friday Verizon Communications announced the acquisition of U.S. telematics supplier Hughes Telematics for a total consideration of $612 million ($12 per share).
the price is quite a premium considering Hughes’ Thursday closing price of $4.35 and the financial performance of the company that has been losing money consistently in the last five years.
In 2011 Hughes revenue was $71 million for a net loss of $85 million.
The merger is expected to close in the third quarter of 2012, and Verizon plans to retain the existing management team and operate the new unit as a subsidiary within Verizon and operated as part of its Verizon Enterprise Solutions group. The business will continue to be headquartered in Atlanta.
Hughes notably supplies telematics solution to Merceces-Benz USA and has signed a deal with Volkswagen Group of America for services that will begin in 2013. As of December 31, 2011, Hughes had approximately 175,000 subscribers to the Mercedes mbrace service offering that was launched in 2009.
the price is quite a premium considering Hughes’ Thursday closing price of $4.35 and the financial performance of the company that has been losing money consistently in the last five years.
In 2011 Hughes revenue was $71 million for a net loss of $85 million.
The merger is expected to close in the third quarter of 2012, and Verizon plans to retain the existing management team and operate the new unit as a subsidiary within Verizon and operated as part of its Verizon Enterprise Solutions group. The business will continue to be headquartered in Atlanta.
Hughes notably supplies telematics solution to Merceces-Benz USA and has signed a deal with Volkswagen Group of America for services that will begin in 2013. As of December 31, 2011, Hughes had approximately 175,000 subscribers to the Mercedes mbrace service offering that was launched in 2009.
In the aftermarket telematics business Hughes’ solution is used by State Farm insurance and AAA Club Partners, the holding company of the 10 American Automobile Association (AAA) Clubs.
Hughes also had a fleet management service subsidiary called Networkfleet that had 132,000 subscribers as of end of 2011.
For Verizon this acquisition strengthen its position in the M2M business where telematics represent about 50 percent of the market.
Hughes also had a fleet management service subsidiary called Networkfleet that had 132,000 subscribers as of end of 2011.
For Verizon this acquisition strengthen its position in the M2M business where telematics represent about 50 percent of the market.
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