Eroad announced that it has entered into a conditional agreement to acquire Coretex Limited, a provider of vertically specialized enterprise-grade telematics solutions in North America, Australia, and New Zealand.
This move will help the company toward reaching its goal of 250,000 units. It will also accelerate Eroad's growth metrics by two years in North America and Australia once the acquisition is complete.
The acquisition is expected to complete in the second half of the 2022 fiscal year. It is subject to Eroad shareholder and New Zealand Commerce Commission approval and New Zealand Overseas Investment Office consent.
“We have always stated that acquisition would be part of our growth strategy to reach our medium- and long-term goals,” said Steven Newman, CEO of Eroad. “We have been clear we would seek complementary and proven technology to augment our product range. To accelerate growth, any acquisition target needed to deliver increased capability, improved customer experiences, and access to additional market verticals. In Coretex we have found a highly complementary partner which allows us to satisfy these criteria.”
The acquisition’s total offer consideration is NZ$157.7 million in upfront consideration and NZ$30.6 million in contingent consideration. This is payable in the 2023 fiscal year subject to Coretex achieving certain performance milestones.
“The combined organization will have the expertise and scale to deliver products the market is demanding faster than each working alone,” said Selwyn Pellett, CEO of Coretex. “Once we understood each other’s strengths, the fit was undeniable.”
Once complete, Eroad says it will accelerate its challenger position in Australia, adding key capabilities and customers in civil construction through enterprise fleets. Globally, and as part of a transformative move, the deal will deliver 64,177 additional connected units in North America, Australia, and New Zealand and a combined revenue of NZ$138.2 million once approved.
“Coretex excels in thinking through the needs of the customers within the frame of the supply chain. Whether it is temperature control, service verification, contamination detection, location, or fuel performance, Coretex takes an end-to-end approach by industry vertical” Newman said. “Balance this against integration of their next generation hardware into ERoad’s broad regulatory product suite and it creates an advanced market fit.”
Selwyn Pellett is set join the ERoad Board as an Executive Director and as an advisor to Steven Newman, Eroad’s CEO, to support the successful integration of the two businesses once the acquisition is complete.