Wireless telecommunications giant Qualcomm has finalized a deal to sell off its telematics and trucking communications arm, Omnitracs, to Visa Equity Parters for $800 million. The sale, first announced in August, was completed on Monday.
The sale marks the exit of Qualcomm from the trucking telematics business where it first got its start in the 1980s. Qualcomm launched Omnitracs, the first ever satellite-based trucking and communications system, with a lucrative contact with private truckload carrier Schneider National in 1988. Omnitracs allows dispatchers and managers at offices and terminals to locate and communicate with truck drivers on the road, better scheduling deliveries and keeping track of cargo. Since then Qualcomm has shipped more than 1.5 million Omnitracs units to 10,000 customers and has pioneered trailer tracking technology and the tracking of intermodal containers.
The company was also a pioneer in wireless communication technologies, including CDMA, or code division multiple access, standards for wireless cellular communication. The company is a leading patent holder in advanced 3G mobile technologies and also 4G and next generation models. Fed on lucrative licensing deals, those divisions have eclipsed the telematics arm. Their Wireless and Internet division, which includes Omnitracs, reported only $633 in revenue during the last fiscal year, a 1% growth from the year before. Meanwhile other major business segments brought in a total of $18.5 billion in revenue and boasted a much higher growth rate.
Omnitracs will however likely receive a boost from a new federal law requiring truckers to use electronic logging devices in the US. The provision, part of the 2012 transportation spending bill, mandates the use of electronic onboard computers on trucks, and will likely come into effect by 2015.
Vista is a private equity firm with $7 billion in capital, specializing in technology and software companies. CEO Robert Smith expressed the firm’s excitement abut their entrance into the telematics field. “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,” he said.
The sale involves Omnitracs’ North American and Latin American operations including Fleet RiskAdvisors and Selectys, companies acquired by Qualcomm 2011. Qualcomm will keep Omnitracs’ European operations and President Jack Kennedy, who spearheaded Omnitracs’ sale, will stay at the helm to investigate strategic alternatives for the company’s remaining telematics business in that region.
The cash sale will result in an estimated $0.22 to $0.25 per share gain.