Verizon buys cloud fleet-management software firm Fleetmatics for $2.4 billion
Fleetmatics and Yahoo! don't have a lot in common. But they each complement existing Verizon (VZ) businesses, and give the company a chance to further diversify its revenue base at a time when it's seeing little to no telecom service revenue growth.
Verizon isn't getting Fleetmatics for cheap -- its acquisition price is equal to 28 times Fleetmatics' consensus 2017 EPS estimate, and 5.9 times its consensus 2017 sales estimate. The deal follows one in June to buy Telogis, a provider of telematics and routing software and services for vehicles.
Verizon appears to be betting the telematics market will continue seeing healthy growth as adoption of in-vehicle 4G connectivity keeps rising, and that it can integrate Fleetmatics and Telogis' telematics offerings with its own to stand out in a fragmented market.
Telematics hardware, software and service providers CalAmp (CAMP) and Novatel (MIFI) rose sharply following news of the deal, as hopes surged that they would receive bids as well. Novatel bought South African telematics firm Digicore last year; CalAmp recently bought vehicle security and tracking firm LoJack.
IBM is reportedly in talks to buy point-of-sale software firm Revel Systems
Revel competes with Square, PayPal (PYPL) , NCR (NCR) and others in the iPad POS market; its customers include Cinnabon, Chobani, and Popeyes. It has 750 employees, and was valued at more than $500 million in a $13.5 million 2015 funding round.