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Investing

Verizon Picks Up Telematics Firm, But No Bargain (VZ, HUTC, GM, TM, QCOM, TRMB)

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By Paul Ausick Published
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Verizon Communications Inc. (NYSE: VZ) has announced a definitive merger agreement with Hughes Telematics Inc. (OTC: HUTC). The all-cash offer totals $612 million, or $12/share. Hughes closed at $4.35 last night, calculating out to a premium of just over 175%.

Hughes makes vehicle telematics equipment that provides roadside assistance, turn-by-turn navigation systems, automated maintenance reminders, and the like. General Motors Co. (NYSE: GM) offers the Hughes service under its OnStar brand. Other car makers using services provided by Hughes include Toyota Motor Corp. (NYSE: TM), BMW, Mercedes-Benz, Hyundai, Peugeot Citroen, and Rolls-Royce.

Hughes also offers a fleet product called Networkfleet whose competitors include Qualcomm Corp. (NASDAQ: QCOM) and Trimble Navigation Ltd. (NASDAQ: TRMB) in supplying after-market telematics services to long-haul trucking fleets.

In its announcement Verizon noted:

We expect M2M [machine-to-machine] and telematics to drive significant growth for Verizon … In powerful combination with Verizon’s global IP network, cloud, mobility and security solutions, Hughes Telematics’ flexible service-delivery platform has the potential to reach beyond the automotive and transportation realm to create new opportunities in mHealth, asset tracking and home automation.

Verizon’s shares are down about -1.3% at $41.11 in the pre-market, within a 52-week range of $32.28-$42.96.

Shares of Hughes will surely pop when over-the-counter trading opens this morning.

Paul Ausick

Contact [email protected] for any questions or corrections.

Disclaimer: Energy Exploration Technologies, Inc. ("EnergyX") has engaged 24/7 Wall St to publish this communication in connection with EnergyX's ongoing Regulation A offering. 24/7 Wall St has been paid in cash and may receive additional compensation. 24/7 Wall St and/or its affiliates do not currently hold securities of EnergyX.

This compensation and any current or future ownership interest could create a conflict of interest. Please consider this disclosure alongside EnergyX's offering materials. EnergyX's Regulation A offering has been qualified by the SEC. Offers and sales may be made only by means of the qualified offering circular. Before investing, carefully review the offering circular, including the risk factors. The offering circular is available at invest.energyx.com/.

Comparisons to other companies are for informational purposes only and should not imply similar results. Past performance is not indicative of future results. Market shortfall are forward‑looking estimates and are subject to substantial uncertainty. Investments in private placements, and start-up investments in particular, are long-term, illiquid, speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest in start-ups

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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