Verizon buys Fleetmatics for $2.4B in cash to step up in telematics

Hot off the heels of its acquisition of Yahoo last week for $4.8 billion, today Verizon announced another huge purchase: it’s buying Fleetmatics, a telematics company based out of Dublin, Ireland, for $2.4 billion in cash to build out the products that it offers to enterprises in the areas of logistics, or with workforces that are on the move, or for IoT services.

The deal will make Fleetmatics a part of Verizon Telematics, a subsidiary of the telco that focuses on fleet management and mobile workforce solutions. It’s part of a short spate of acquisitions that Verizon has been making lately to expand that telematics business: about six weeks ago, Verizon Telematics announced that it would acquire Telogis. That deal’s financial terms were not disclosed.

More generally, the acquisition points to ways that Verizon is continuing to use its balance sheet to finance investments into newer areas to offset continuing declines in its core, legacy business of basic phone services. As that market has become increasingly commoditized, Verizon is hoping to invest into newer areas to move beyond “dumb pipe” status.

While its acquisition of AOL (and now Yahoo) will help Verizon scale up its media, advertising and content operations, Fleetmatics is going straight into Verizon’s ambitions in enterprise services, and specifically enterprise mobility.

Companies like Uber have been investing a lot to build out a logistics business that goes beyond the transportation of people, and there are a number of other startups (and much larger players, like Amazon) that are hoping to disrupt more traditional providers of services to move things from points A to B. Verizon is buying into the technology used for these services, as one way to increase the revenues it makes from enterprises, beyond basic network connectivity.

Fleetmatics is an SaaS-based provider of GPS and other services to fleets and companies with mobile workforces. It has 37,000 customers, 737,000 subscribers and 1,200 employees. The services that it offers include location services, driver and car security services, fuel tracking, dispatching and billing/invoice services.

Fleetmatics has been publicly traded since 2012 and the deal is equivalent to $60 per share in cash, Verizon said. When it was private, Fleetmatics had raised over $93 million from investors like IVP.

Verizon Telematics CEO Andres Irlando says the deal was done to build up its telematics services for small and medium businesses.

“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,” he said in a statement. We will be talking with him later and will ask if there are more deals of this kind to come.