MiX Telematics, PowerFleet merger to form global IOT giant
US-based telematics firm PowerFleet and JSE- and NYSE-listed MiX Telematics have entered into a definitive agreement to form one of the largest mobile asset internet of things (IOT) software-as-a-service (SaaS) providers in the world.
In a joint statement today, the firms say this combination will form a scaled, global entity.
The companies want to create a combined business with total revenue of $279 million (R5.3 billion), including $210 million (R4 billion) in recurring SaaS revenue, and $39 million (R747 billion) of adjusted EBITDA for the 12-month period ended 30 June 2023 (excluding selected non-cash and non-recurring items).
The transaction is expected to close in the first quarter of calendar year 2024.
Upon close, the combined business will be branded as PowerFleet, with its primary listing on Nasdaq. MiX will delist from the JSE after the transaction.
“By leveraging our proven SaaS strategy across the combined business, spearheaded by our Unity platform and data highway, we firmly believe we will be extremely well-positioned to drive incremental market consolidation,” says Steve Towe, PowerFleet chief executive officer, who will continue serving as CEO of the combined PowerFleet company.
“Realising transformative scale, this transaction with MiX will provide the go-forward company with 1.7 million subscribers, and the ability to sell additive and accelerated AI [artificial intelligence] and data-powered software solutions to a truly global set of customers.
“This combination is expected to achieve a number of strategic objectives, including unlocking strong incremental value creation opportunities; a refinanced balance sheet for the combined company that will provide more flexibility to execute our strategic growth initiatives; and the ability to retain and attract an expanded portfolio of shareholders.
"Combining with MiX, an extremely well-run and profitable organisation, will establish the combined entity as a world-class SaaS company, giving us the speed and capability to achieve improved growth in high-quality recurring revenues and expanded profitability much sooner.”
Stefan Joselowitz, CEO of MiX Telematics, intends to retire at the conclusion of this transaction, but plans to continue to be a shareholder of the new combined entity.
Joselowitz says: “I am extremely proud of our heritage and the high-quality business MiX is today, and I am delighted to have finally found an ideal partner that shares our values and strategic goals to take the company to the next level.
“We strongly believe PowerFleet’s Unity strategy and our combined scale perfectly positions us to revolutionise the mobile asset IOT SaaS industry and drive transformative growth. As a shareholder, I am very excited about how this combination will accelerate the achievement of our shared strategic goals.”
Under the deal, MiX shareholders will exchange 100% of their outstanding MiX ordinary shares (including MiX ordinary shares represented by MiX American Depository Shares, each of which represents 25 MiX ordinary shares) for consideration consisting of PowerFleet common shares, payable at closing.
The number of PowerFleet common shares to be issued as consideration will be based on a post-transaction ownership structure, whereby current MiX shareholders will own approximately 65%, and current PowerFleet shareholders will own approximately 35% of the combined entity immediately following the closing of the transaction.
This exchange ratio assumes all MiX issued ordinary shares (including those represented by MiX American Depository Shares) are exchanged for common shares in PowerFleet.
In connection with the transaction, PowerFleet and MiX are positioned to secure $75 million (R1.4 billion) in incremental debt, which the companies anticipate will be fully executed at or before close.
The proceeds from the refinancing of the combined company’s balance sheet will be used to redeem in full the outstanding convertible preferred stock held by affiliates of Abry Partners. Transaction-related expenses will be paid from cash on the balance sheet.
The closing of the transaction is subject to customary conditions, including required approvals of regulatory authorities, and PowerFleet and MiX shareholders.