Deal Expand’s Telecom Group’s Connected Car Offering.
Vodafone Group PLC said Monday it has agreed to buy Cobra Automotive Technologies SpA, an Italian provider of electronics services to the car industry, for €145 million ($197.5 million) as part of its strategy to connect more everyday objects.
The British mobile telecommunications giant, similar to its peers, is eager to develop its business in the so-called “machine-to-machine” (M2M) industry—also known as the “internet of things” —as a growing source of sales.
U.S. networking equipment manufacturer Cisco Systems estimates 50 billion devices, across sectors including health care, automotive, transportation and energy, will be connected to the Internet by 2050.
The growth represents a potentially lucrative sales opportunity for the mobile telecommunications industry, analysts say, with new connected wireless devices set to surpass the number of mobile handsets in the coming decade, according to consultancy PricewaterhouseCoopers.
Vodafone employs 250 staff at its M2M operations, which reported a 21% rise in revenue for the fiscal year ended March 31. Focused on automotive, smart metering and consumer electronic products, the company said it has increased M2M connections to 16.2 million from 12 million in the period and that it expects connections to growth at an average of 24% a year between 2013 and 2018.
Vodafone said that buying Cobra would enable it to provide a more comprehensive range of services to automotive customers. The company said it already has a “considerable presence” in automotive services, without disclosing more information.
Erik Brenneis, director of machine-to-machine at Vodafone, said:
“The combination of Vodafone and Cobra will create a new global provider of connected car services.”
Mr. Brenneis wasn’t immediately available for further comment.
Cobra is listed on the Milan stock exchange and has operations in Brazil, China, France, Germany, Italy, Japan, South Korea, Spain, Switzerland and the U.K., Vodafone said. Cobra provides vehicle manufacturers, dealerships and aftermarket customers with a range of products and services, including telematics, usage-based insurance, and vehicle tracking.
Vodafone said it would launch a voluntary tender offer of €1.49 a share for Cobra in the coming weeks. Cobra had a reported net debt of €48 million as at 31 March 2014. The offer is conditional on, among other things, obtaining appropriate antitrust approvals and is expected to complete in the third quarter of 2014.