Sirius XM Radio has announced a $530 million cash takeover of Agero’s connected-vehicle business in a deal that will allow the radio broadcaster to strengthen its position in the burgeoning market for connected-vehicle services.
Sirius (New York City, NY, USA) says Agero (Medford, MA, USA) has been a leading provider of telematics services offering safety, security and convenience services for drivers, as well as turnkey solutions for carmakers, and believes it will be able to provide services to a bigger number of manufacturers – including Acura (Tokyo, Japan), BMW (Munich, Germany), Honda (Tokyo, Japan), Hyundai (Seoul, South Korea), Infiniti (Hong Kong), Lexus (Nagoya, Japan), Nissan (Yokohama, Japan) and Toyota (Aichi, Japan) – than any other telematics provider once it has completed the takeover.
Sirius has been moving beyond its traditional business as a radio broadcaster into the field of telematics and recently formed an agreement with US telecoms operator AT&T (Dallas, TX, USA) to provide emergency support and tracking services to Nissan vehicles in the North American market.
“The acquisition of Agero’s connected vehicle business is a natural fit for Sirius XM,” said Jim Meyer, the chief executive of Sirius. “As the world’s leading provider of in-vehicle subscription services, SiriusXM is uniquely positioned to offer world-class end-to-end telematics services.”
“The transaction accelerates Sirius XM’s development in architecture supporting connected-vehicle services, as well as the ability to provide services over both satellite and cellular networks,” he added.
Sirius already claims to provide audio entertainment and data services to more than 50 million vehicles, giving it a large customer base to which it can try selling additional telematics services.
The company expects the deal to close in the fourth quarter of 2013, after securing the necessary regulatory approvals.
“We expect telematics to develop into a meaningful business for Sirius XM over time, and also provide some comfort to investors that Sirius XM has something to gain from the connected car, rather than simply facing more audio competition,” said James Marsh, an equity analyst at Piper Jaffray Cos, as quoted by Bloomberg.