Micronet Enertec Technologies, Inc. (NASDAQCM: MICT) has signed a definitive agreement for the asset acquisition of the Telematics business (Telematics) of Novatel Wireless, Inc. (NasdaqGS: MIFI), the company said.
The transaction is scheduled to close by the end of the first quarter of 2016, subject to the completion of financing by Micronet Enertec.
The total purchase price of USD24 million includes inventory. Novatel Wireless and Micronet Enertec will also enter into a manufacturing and supply agreement whereby Novatel Wireless commits to purchase from Micronet Enertec telematics products that are expected to generate significant revenues for a period of at least three years.
In 2015, the Telematics business of Novatel Wireless generated approximately USD22 million in revenue. Annual revenue for 2016 of the Telematics business is anticipated to grow by 20 percent with estimated EBITDA of approximately 18 percent of revenues. USD12 million of the purchase price will be paid at closing, with two payments of USD6 million on each of the first two anniversaries of the closing date. Micronet Enertec intends to finance the transaction primarily with debt.
Following the acquisition, Micronet Enertec will offer a broadened product line targeting additional high-growth market segments in addition to the existing ones serviced currently. These new segments include the emerging usage-based insurance market, consumer telematics, asset tracking and dealer/lot management.
Micronet Enertec Technologies primarily operates through Enertec Systems 2001 Ltd, its wholly owned subsidiary, and Micronet Ltd, in which it has a controlling interest. Micronet operates in the growing commercial MRM market, mainly in the United States. Micronet designs, develops, manufactures and sells rugged mobile computing devices that provide fleet operators and field workforces with computing solutions in challenging work environments.