Omnitracs LLC, which provides fleet management services to transportation and logistics companies, said today it has agreed to buy XRS Corp., which specializes in mobile fleet optimization software for motor carriers, in a $178 million deal valued at $5.60 a share.
XRS' board unanimously approved the deal. Large XRS shareholders such as equity firms Trident Capital and Technology Crossover Ventures have said they would vote in favor of the merger, according to Omnitracs. The transaction is expected to close in the fourth quarter, Omnitracs said.
The acquisition broadens San Diego-based Omnitracs' position in the market for mobility software designed to help truck fleets collect and analyze compliance and management data. XRS, based in Eden Prairie, Minn., is especially active in developing mobile solutions ahead of the federal government's mandate that all trucks subject to the driver hours-of-service regulations be equipped with electronic logging devices (ELDs), formerly known as electronic on-board recorders, over the next three to four years. Over time, electronic logs will replace paper logs to ensure compliance with hours-of-service rules.
XRS believes its mobility software provides drivers and fleets with a cost-effective alternative to equipping each truck with a cab-mounted logging device that could cost more than $1,600 a truck, according to estimates from the Federal Motor Carrier Safety Administration (FMCSA), a subagency of the Department of Transportation that is responsible for truck and bus safety.
In a statement, Omnitracs CEO John Graham said the XRS acquisition would strengthen his company's portfolio. "XRS has built a significant business focused on delivering transportation management solutions via mobile devices, and we believe this is a great addition to our suite of offerings," Graham said.
In December 2013, Omnitracs acquired Roadnet Technologies, a provider of fleet management software solutions to private fleets.
The deal values XRS stock at an 85 percent premium over Friday's closing price. As of midafternoon trading today, XRS stock had soared 83 percent over Friday's close to $5.53 a share. Omnitracs is privately held.