MONTVALE, N.J., Feb. 18, 2016 /PRNewswire/ -- Micronet Enertec Technologies, Inc. (NASDAQCM: MICT), a developer and manufacturer of rugged computers, tablets and computer-based systems for the commercial Mobile Resource Management (MRM) – Fleet Management (FM) and Aerospace and Defense markets, announced that it has signed a definitive agreement for the asset acquisition of the Telematics business (Telematics) of Novatel Wireless, Inc. (NasdaqGS: MIFI). 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 $24 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 $22 million in revenue. Annual revenue for 2016 of the Telematics business is anticipated to grow by 20% with estimated EBITDA of approximately 18% of revenues. $12 million of the purchase price will be paid at closing, with two payments of $6 million on each of the first two anniversaries of the closing date. Micronet Enertec intends to finance the transaction primarily with debt.
The assets include all intellectual property, including patents and know how, goodwill and the customer base of the Telematics hardware business. Employees of Novatel Wireless's Telematics business will join Micronet Enertec to provide a successful and continuous operation and growth of the business. The assets to be acquired consist of a complete portfolio of sophisticated vehicle mounted telematics products that complement Micronet Enertec's current business and position Micronet Enertec as a major supplier for the multibillion dollar MRM and telematics market. The feature-rich solutions address the growing need for on board diagnostics (OBD) and provide such benefits as real-time crash detection and analysis, the assessment of driver behavior and diagnostic information to aid in the dispatch of appropriate service vehicles.
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.
The acquisition will better position Micronet Enertec to service customers' growing need to comply with the U.S. Department of Transportation's Electronic Logging Mandate which requires interstate commercial truck and bus companies to use Electronic Logging Devices (ELDs) in their vehicles to record their compliance with the safety rules that govern the number of hours a driver can work. Implementation of the rule began in December of 2015 with full enforcement of the regulations commencing in 2017.
The Company's international footprint will be expanded, adding new customers in Europe, Africa and the Far East, complemented by state-of-the-art operations in San Diego, Europe, China and Mexico.
David Lucatz, Chief Executive Officer of Micronet Enertec, stated, "This transformative acquisition positions us as a leader in the growing telematics space. Our company will have a significantly expanded market opportunity, with experts estimating the market for stand-alone vehicle installed GPS-Wireless data devices to be ten times larger than the market for displays today. This acquisition will enable existing and new customers to source their hardware solution from one integrated supplier – for example we will offer a stand-alone 'fixed installed' black box solution, a self-installed (OBD dongle) solution, a stand-alone rugged display as well as a fully integrated all-in-one solution."
Mr. Lucatz continued, "This acquisition brings us impressive engineering talent, an industry leading telematics portfolio and strong customer relationships that are complementary to our growing mobile resource management business. Furthermore, as part of the transaction, Novatel Wireless becomes an important long-term customer for us with committed purchases for three years. We expect to be able to drive strong organic growth given the broader solution for customers while at the same time realizing efficiencies from our enhanced scale."
About Micronet Enertec Technologies, Inc.
Micronet Enertec Technologies, Inc. (NASDAQCM: MICT) 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. Enertec operates in the Defense and Aerospace markets and designs, develops, manufactures and supplies various customized military computer-based systems for missile defense systems, command and control and others. The Company's products, solutions and services are designed to perform in severe environments and battlefield conditions. For more information please visit: www.micronet-enertec.com, the content of which is not incorporated by reference into this press release.
This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws. These forward-looking statements include, but are not limited to those statements regarding the proposed acquisition of the Telematics business, our plans to finance it, the expected closing date and accretion, anticipated growth of the Telematics business in 2016, the expected impact of the acquisition on our products, solutions, market positioning, revenues, long-term growth, our engineering talent, customer base and relationships as well as the manufacturing and supply agreement we intend to enter with. Novatel Wireless and the revenues it is expected to generate for a period of at least three years.
Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements contained in this press release are subject to other risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in the Company's annual report on Form 10-K for the year ended December 31, 2014 and in subsequent filings with the Securities and Exchange Commission. Except as otherwise required by law, the Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE Micronet Enertec Technologies, Inc.