Verizon's acquisition of Telogis should create the second-largest telematics company in the U.S. in a deal that brings together complementary businesses, a leading telematics consultant said.
Once combined, Verizon and Telogis would be second to Fleetmatics in number of units under management in the U.S. market. Globally, the combined entity would be third behind Fleetmatics and TomTom Telematics, according to Clem Driscoll, a leading telematics consultant who produces an annual market study.
The deal brings Verizon a telematics company in Telogis that has developed partnerships with Ford, General Motors, Hino, Isuzu, Mack, and Volvo's Class 8 truck unit. Verizon Telematics has focused more on building a subscriber list for its Web-based Networkfleet software service, Driscoll said.
"To me it’s a statement by Verizon that they want to get deeper into GPS fleet management or more broadly they want to get deeper into M2M (machine-to-machine) data services," Driscoll said. "They have aggressively built a subscriber base for Verizon Networkfleet. That business has been growing at a fast rate. It's leveraged mostly by the Verizon B2B salesforce, which has been feeding a lot of leads into Networkfleet and helping them grow."
Telogis has been in the top 10 of telematics providers listed in Driscoll's study, and the company brought in about $89 million in revenue in 2014. That could put the sales price in the $250 million to $400 million range, he said.
Both companies offer Software-as-a-Service (SaaS) rather than the black-box hardware that pulls operational data from a vehicle's OBD system.
The merger may be a sign of future consolidation for the telematics industry, which now counts several hundred vendors, according to fleet management company LeasePlan USA.
"This acquisition is further confirmation that telematics is becoming a must-have technology for effective fleet management today," said Dan Shive, LeasePlan's vice president of risk management services. "It is also a sign of expected vendor consolidation in a maturing marketplace. Telematics has grown exponentially in recent years with scores of providers, many of which were funded by venture capital investment. They are now looking for long term strategic partnerships to remain viable."
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