Satellite radio provider SiriusXM has agreed to acquire the connected vehicle services business of roadside assistance specialist Agero for US$530m in cash.
The connected vehicle unit predominantly provides automotive telematics services, an area that…
Satellite radio provider SiriusXM has agreed to acquire the connected vehicle services business of roadside assistance specialist Agero for US$530m in cash.
The connected vehicle unit predominantly provides automotive telematics services, an area that SiriusXM has stated for some time will be increasingly important to its business.
During the Q2 2013, the satellite radio provider launched an in-car IP streaming app with Ford, while in a recent investor call Jim Meyer, chief executive officer of SiriusXM, commented: “Ultimately, we believe that merging satellite and IP connectivity in the car will provide a superior service for subscribers.
“Our plan is to provide services to connected vehicles are getting increasingly sophisticated and we are very excited about the company’s future in this area. We want to be a leader in the connected car architecture as it rolls out.”
Agero’s connected vehicles business has been rumoured to be a potential acquisition target for SiriusXM for some time. Back in April of this year, Citigroup analyst Jason Bazinet reportedly valued the business at more than US$2bn.
The transaction is expected to close in the fourth quarter of 2013. Morgan Stanley acted as financial adviser to SiriusXM and TAP Advisors is advising Agero.
Commenting on the deal, Meyer said: “The acquisition of Agero’s connected vehicle business is a natural fit for Sirius XM. 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 SiriusXM’s development in architecture supporting connected vehicle services, as well as the ability to provide services over both satellite and cellular networks.”
Through its network of OEM agreements with the auto industry, SiriusXM is in more than 50 million vehicles.
The acquisition represents SiriusXM’s first major purchase since Sirius and XM merged back in 2008. Since that date the company has focused on first achieving the necessary critical mass of subscribers to turn a profit and then refinancing its substantial debt burden. Having achieved both of these, the company has been under pressure to return some of its cash to shareholders and to that end, has undertaken a series of share buybacks over the past year.
