US chipmaking giant Qualcomm has sold its Omnitracs telematics division to private-equity player Vista for the sum of $800 million in cash.
The deal is to include all the Omnitracs operations in the US, Canada and Latin America, as well as Sylectus and FleetRisk Advisors – telematics businesses that Omnitracs bought in 2011.
The transaction is expected to close between October and December after the companies have secured the necessary regulatory approvals.
Omnitracs has flourished since coming into existence in the late 1980s, but faces competition from a variety of companies in the fast-developing telematics market, while
Qualcomm appears keen to focus on its core business of developing chips for smartphones and other mobile devices.
For the three months ending June, Qualcomm (San Diego, CA, USA) reported a 35% increase in revenues, to $6.24 billion, and a 31% rise in net income, to $1.58 billion, but Omnitracs did not even receive a mention in the company’s earnings statement.
Indeed, the company generates most of its income from licensing agreements, and the Qualcomm Wireless & Internet division that includes Omnitracs accounted for just 3% of Qualcomm’s total revenues for the three months ending June.
“The opportunity for fleet management and telematics is evolving rapidly, and we believe Omnitracs is well positioned to continue its leadership position as a stand-alone entity,” said Derek Aberle, executive vice president and group president of Qualcomm.
“Vista’s [Austin, TX, USA] long-term investment focus and experience helping software, data and technology-enabled businesses drive growth and leadership positions is a great fit for the Omnitracs business and management team. We look forward to witnessing their continued success together.”
Vista says it was attracted to Omnitracs because of the strong position it enjoys in the industry, with a base of “loyal and satisfied” customers, and believes its experience of working with other vertically oriented software companies will help it to expand Omnitracs’ range of product offerings.
“We are long-term investors in enterprise software, data and technology-enabled businesses that are committed to being leaders in their fields,” said Robert Smith, chief executive officer and founder of Vista Equity Partners. “We are impressed with the compelling value proposition Omnitracs’ products and services offer their customers. We look forward to working with them and helping them to reach their full potential.”