Powerfleet and MiX Telematics announce business combination
Combination expected to create a major global provider in the telematics and mobile asset IoT solutions market. Close of the deal is expected in the first quarter of calendar 2024.
PowerFleet, Inc. and MiX Telematics Limited today announced that they have entered into a definitive agreement to form one of the largest mobile asset Internet of Things (IoT) providers in the world. The companies called it a powerful combination that will focus on helping customers save lives, time, and money by solving mission-critical business challenges including safety and risk management, compliance, sustainability, and operational efficiency.
In warehousing and distribution, PowerFleet is well known for its lift truck telematics and fleet software, though its solutions span other mobile asset types as well. In the announcement of the combination, the companies noted that the combined business will have total annual revenue of $279 million, including $210 million in recurring software-as-a-service (SaaS) revenue and $39 million of adjusted EBITDA for the trailing twelve-month (TTM) period ended June 30, 2023 (excluding selected non-cash and non-recurring items).
The transaction is expected to close in the first quarter of calendar year 2024. Upon close, the combined business will be branded as Powerfleet, with its primary listing on Nasdaq.
“By leveraging our proven SaaS strategy across the combined business, spearheaded by our Unity platform and data highway, we firmly believe we will be extremely well positioned to drive incremental market consolidation,” said Steve Towe, Powerfleet’s Chief Executive Officer, who will continue serving as CEO of the combined Powerfleet company. “Realizing transformative scale, this transaction with MiX will provide the go-forward company with 1.7 million subscribers, and the ability to sell additive and accelerated AI and data-powered software solutions to a truly global set of customers.”
The combination is expected to achieve a number of strategic objectives, Towe added, including unlocking strong incremental value creation opportunities; a refinanced balance sheet for the combined company that will provide more flexibility to execute strategic growth initiatives; and the ability to retain and attract an expanded portfolio of shareholders. “Combining with MiX, an extremely well-run and profitable organization, will establish the combined entity as a world-class SaaS company, giving us the speed and capability to achieve improved growth in high quality recurring revenues and expanded profitability much sooner,” Towe commented.
Stefan Joselowitz, Chief Executive Officer at MiX Telematics, intends to retire at the conclusion of this transaction, but plans to continue to be a shareholder of the new combined entity. Joselowitz added, “I am extremely proud of our heritage and the high-quality business MiX is today, and I am delighted to have finally found an ideal partner that shares our values and strategic goals to take the company to the next level. We strongly believe that Powerfleet’s Unity strategy and our combined scale perfectly positions us to revolutionize the mobile asset IoT SaaS industry and drive transformative growth. As a shareholder I am very excited about how this combination will accelerate the achievement of our shared strategic goals.”
The business combination is postioned by the companies as creating a top-tier mobile asset IoT SaaS organization with significant scale, serving all mobile asset types, with a combined base of approximately 1.7 million subscribers following the transaction.
MiX shareholders will exchange 100% of their outstanding MiX ordinary shares (including MiX ordinary shares represented by MiX American Depository Shares (ADSs), each of which represents 25 MiX ordinary shares) for consideration consisting of Powerfleet common shares, payable at closing. The number of Powerfleet common shares to be issued as consideration will be based on a post-transaction ownership structure, whereby current MiX shareholders will own approximately 65%, and current Powerfleet shareholders will own approximately 35% of the combined entity immediately following the closing of the transaction. This exchange ratio assumes all MiX issued ordinary shares (including those represented by MiX ADSs) are exchanged for common shares in Powerfleet.
In connection with the transaction, Powerfleet and MiX are positioned to secure $75 million in incremental debt which the companies anticipate will be fully executed at or before close. The proceeds from the refinancing of the combined company’s balance sheet will be used to redeem in full the outstanding convertible preferred stock held by affiliates of Abry Partners. Transaction-related expenses will be paid from cash on the balance sheet.
The closing of the transaction is subject to customary conditions, including required approvals of regulatory authorities and Powerfleet and MiX shareholders.
