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Telular Corporation (NASDAQ: WRLS):
- Asset Acquisition Represents a Step-Up in the Value Chain for TankLink
- Immediately Accretive and Expected to Add an Annualized $1.4 Million of Net Income before Non-Cash Items
- Telular Increases Full Year 2011 Guidance
Telular Corporation (NASDAQ: WRLS), a leader in alarm and event monitoring solutions and services, today announced the acquisition of assets underlying the SMARTank line of business of SMARTLogix, Inc., the largest value added reseller of TankLink tank monitoring solutions.
As a result of this transaction, TankLink has acquired a direct relationship with over 400 end-user customers representing nearly 16,000 of its previously existing billable tanks from SMARTLogix. Having these direct customer relationships will allow TankLink to realize incremental revenue, as warranted by a retail service provider as compared to the wholesale revenue it previously received. SMARTLogix and its experienced sales force will continue to exclusively represent the SMARTank line of business to petroleum products distributors under a sales agency agreement executed with TankLink, coincident with the acquisition. As a result, SMARTLogix will continue to sell TankLink’s monitoring services in conjunction with its own proprietary SMARTruck line of business, resulting in a complete supply chain optimization solution for fuel and lubricant distributors in the petroleum space.
Terms of the transaction include a purchase price of $6.0 million and the opportunity for SMARTLogix to earn up to an additional $2.4 million based on performance measures over the next two years. Telular will pay the $6.0 million initial purchase price with $1.5 million in cash and through the conversion of an existing receivable. On an annualized basis, Telular estimates that SMARTank will contribute an additional $2.6 million of revenue and $1.4 million of net income before non-cash items to its consolidated financial results.
“I am very excited about the acquisition of SMARTank as it puts us in a direct relationship with a majority of TankLink’s current end users,” said Joseph Beatty, president and chief executive officer of Telular Corporation. “This will allow us to earn higher recurring revenue and operating cash flow margins while we will continue to enjoy our relationship with SMARTLogix and its ability to utilize its deep, petroleum industry experience to attract customers to SMARTank services.”