I.D. Systems to Acquire Pointer Telocation Company for $140 Million in Cash and Stock

Global IoT Telematics Software and Solutions Company to be Re-branded PowerFleet

I.D. Systems, Inc. provider of enterprise asset management and Industrial Internet of Things (IoT) technology, and Pointer Telocation Ltd. provider of telematics and mobile IoT solutions, have entered into a definitive agreement whereby I.D. Systems will acquire all of the outstanding shares of Pointer in a cash and stock transaction valued at approximately $140 million.

Acquisition Summary and Key Developments

·         Total consideration of $140 million comprised of approximately $72 million in cash and approximately 11 million shares of PowerFleet, Inc., a newly-created holding company

·         Combined business generated $131 million of revenue, including $72 million in recurring revenue and $14 million of adjusted EBITDA for fiscal 2018 (excluding selected non-cash and non-recurring items)

·         Approximately $3.5 million of cost savings expected to be realized within the first 12 to 18 months following the close of the acquisition

·         Expected to be accretive to non-GAAP earnings per share (EPS) in first 12 months following the close of the acquisition

·         Abry Partners to invest $50 million in a convertible preferred equity investment that will be funded contemporaneously with closing of the Pointer acquisition

·         John Hunt (Managing Partner) and Anders Bjork (Principal) of Abry Partners will join the PowerFleet Board of Directors at the closing

·         I.D. Systems has secured a commitment from Bank Hapoalim for a $30 million term loan and a $10 million revolving credit facility, which will be funded contemporaneously with closing of the Pointer acquisition

·         Combined company is expected to have over $20 million of cash on-hand and credit facilities at closing

·         I.D. Systems CEO, Chris Wolfe, and CFO, Ned Mavrommatis, to lead combined company with Pointer CEO, David Mahlab, to serve as CEO International and as a member of the PowerFleet Board of Directors, Pointer CFO, Yaniv Dorani to serve as Deputy to CEO International

·         Acquisition expected to close in the Summer of 2019

·         The combined company is expected to be dual listed on Nasdaq and the Tel Aviv Stock Exchanges under the re-branded PowerFleet name

·         Pointer Telocation and Cellocator brands will continue as the international go-to-market brands

Pointer Telocation Overview

Pointer Telocation is a leading provider of innovative telematics and mobile IoT solutions to the automotive, insurance and logistics (cargo, assets and containers) industries. Pointer’s cloud-based software-as-a-service (SaaS) platform, which has more than 275,000 monthly subscriber units, extracts and captures data from an organization’s mission critical mobility points, including drivers, routes, points-of-interest, logistics network, vehicles, trailers, containers and cargo. Pointer’s platform then analyzes and converts this data into actionable intelligence optimizing customers’ assets and improving profitability. Pointer’s technology is currently deployed in approximately three million light and heavy commercial vehicles across 80 countries.

Management Commentary
“We believe this is a transformative acquisition for I.D. Systems and our industry, as it combines our market and product leadership in North America with Pointer’s technology leadership, supply chain acumen and broad international footprint,” said Wolfe. “The acquisition builds on a two-year strategic working relationship with David and the Pointer team, where we have been co-developing numerous award-winning products. Through our collaboration, it became increasingly evident that our business values and strategy are well aligned on the shared mission of improving our customers’ operations through innovative design, engineering discipline, and building industrial-grade solutions. By unifying our businesses, we plan to create significant operational, technological and go-to-market synergies, which will enable faster time-to-market of revenue generating new products and features. Realizing these product development and delivery opportunities is enhanced by the fact that we both utilize the same tech stack in our development and hosting environments. Together, I.D. Systems and Pointer will join a select group of IoT companies with more than 500,000 subscribers, and have the added benefit of being vertically integrated, unlike others in the market.”

Mahlab commented: “Pointer has built a successful and profitable company in the high-growth telematics industry. We have earned a reputation for technology rich products, expert technical services, advanced software solutions and innovative IoT mobile solutions, all under a brand that is valued by our customers and the industry for quality and reliability. The combination of I.D. Systems and Pointer will deliver high-value, technology leading, IoT products globally. By expanding our product offerings and services, we expect to extend our leadership position in the growing mobile IoT and connected vehicle market, increase our penetration in North America, as well as expand our share of the global multi-billion-dollar IoT telematics market. I am extremely proud of Pointer’s track record of improving shareholder value and this combination marks yet another step in delivering on our commitment to that goal.”

Wolfe added: “From a cross-selling standpoint, the acquisition is expected to provide exciting opportunities for both companies. First, it should enable I.D. Systems to more effectively sell its solutions internationally through Pointer’s Cellocator division’s direct and indirect channel network. Secondly, we plan to leverage our enterprise and SMB distribution channels to bring Pointer’s solutions to the massive North American market. Additionally, Pointer has been developing connected car and light duty truck solutions for years. By joining our platforms and solutions, we will create immediate leverage and greatly accelerate the combined company’s connected vehicle strategy. Ultimately, all vehicles will be connected in order to optimize the in-car and fleet-management experience, and our combined offering will help to better facilitate and fast-track this vision.

Together, our combined team of exceptional employees will serve thousands of customers globally across 80 countries. These unique characteristics provide us not only with tremendous scale but, as important, position us to accelerate organic growth potential as well. Our combination establishes a robust global IoT platform with expansive product offerings, which we expect will enable us to capture greater share of the global multi-billion-dollar IoT telematics software and solutions market.”

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