Canadian wireless fleet-tracking and -maintenance firms BSM Technologies Inc. and Webtech Wireless Inc. will merge into one telematics company worth $65 million, the companies said Friday.
In a joint announcement, the firms framed the deal as a merger of equals, saying the move would give them enough scale to gain financial leverage, increase their profit margins, and increase spending on research and development to develop innovative new products.
The combined company will be known as BSM Technologies Inc., with headquarters in Toronto. Current Webtech Chairman and CEO Andrew Gutman will serve as chairman of the new board, while the executive management team will continue to be led by current BSM President and CEO Aly Rahemtulla.
Together, they will offer telematics systems combining BSM's market presence in rail with Webtech's business in the government and trucking verticals, as well as serving the construction sector and other vertical industries. The merged corporation will have 155,000 subscribers across Canada and the U.S., generating $44 million in total revenue.
Known primarily for vehicle communication systems such as OnStar, telematics is an important tool in logistics for transmitting real-time data from a variety of vehicles, allowing fleet managers to monitor details such as vehicle use, maintenance requirements, and automotive servicing, according to technology research firm Gartner Inc.
In terms of technology, the original BSM, also located in Toronto, will contribute its experience in remote monitoring, fleet management, and fleet diagnostics systems, while Webtech, now headquartered in Vancouver, has expertise in global positioning system (GPS) fleet-management solutions and automatic vehicle location (AVL).
"[The merger] is an opportunity to combine two similar-sized businesses and create significant scale in a consolidating market," BSM CEO Rahemtulla said.
"We believe that upon completion of the integration process, we will have sufficient scale to significantly increase our operating margins. ... We are very excited about the potential to deliver accelerated growth, unlock financial leverage, and establish a dominant position in targeted telematics verticals," said Rahemtulla.
The final merger is subject to a majority vote of BSM shareholders, scheduled for September 2015, and other conditions.