EROAD is pleased to announce that it has agreed to acquire 100% of Coretex Limited ('Coretex'), a telematics vertical specialist provider delivering enterprise grade solutions. This is a transformative move, improving EROAD's position as a vehicle telematics leader and taking a strong step toward its goal of reaching 250,000 units.
'We have always stated that acquisition would be part of our growth strategy to reach our medium- and long-term goals. 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' says Steven Newman, CEO of EROAD.
The combined organisation will have the expertise and scale to deliver the products the market is demanding faster than each working alone. 'Once we understood each other's strengths, the fit was undeniable. For customers, for both company's employees, and of course, for New Zealand' says Selwyn Pellett, CEO of Coretex.
Both EROAD and Coretex are home grown NZ tech start-ups which have enjoyed sustained success on the global telematics stage. 'The fact that both businesses have been focused on the same international markets, but have matured with complementary strengths is incredible' Newman says. 'The real winner is NZ tech. We see so many NZ tech start-ups being acquired by international players and jobs going offshore once they reach a certain size. It feels great to be able to reverse that trend for once and lead to industry disruption from this end of the world'.
'So much of how we operate, our pace, our attitude, our DNA is grounded in being Kiwi, even if we have been primarily focused on servicing growth in the North American market' Pellett says. 'It's no secret I have strong views regarding the importance of continuing the growth of NZ's tech sector, so being able to join forces with another NZ success story feels like the best outcome possible'.
This is bold growth
Once complete, the combined organisation will strengthen is market position as a significant supplier of in-vehicle fleet management solutions and trailer telematics in the North American market. EROAD accelerates its challenger position in Australia, adding key capabilities and customers in civil construction through enterprise fleets. Its New Zealand customers will benefit from faster access to next generation technology not currently available in the local market.
'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 says. 'Balance this against integration of their next generation hardware into EROAD's broad regulatory product suite and it creates an advanced market fit.'
Post completion, EROAD will have a base of 190,380 active units across all three markets.
This is smart strategy
EROAD and Coretex have each established themselves on the global telematics stage. 'While we operate in the same countries, we have used different strategies', Newman says. As the market for vehicle telematics continues to expand, these two New Zealand-based technology providers are coming together to expand their opportunities for growth in global telematics.
Combining EROAD's leadership position and expertise in broadly adopted regulatory telematics solutions with Coretex's extensive vertical expertise, technology and customer base is a great fit.
'With large customers, you adapt to a key account model for support. And while servicing customers of considerable size isn't easy, it's a very different skill to also service a large volume of customers. And that operating model is what we'd need to scale' Pellett says. Whilst both businesses have significant exposure to enterprise clients, this transaction achieves a more balanced customer mix post completion of 52 per cent enterprise and 48 per cent small to medium businesses.
'Part of the beauty of EROAD's approach is the breadth of application - essentially covering everything a road-reliant fleet needs to meet regulatory requirements with enhanced efficiency' Pellett says.
Post completion, EROAD will be able to realise accelerated and sustained growth in all markets through faster innovation, better product design, and delivery of an exceptional customer experience.
This is a new beginning
EROAD is taking purposeful steps to capture more of the global vehicle telematics market - estimated to grow to $750B by 2030. The joint expertise of Coretex and EROAD will put the combined organisation at the forefront of the industry's digital transformation.
'The future is exciting, I want the pace and process of innovation to continue to flourish through the combined business' says Newman. 'We both aspire to create a safer, more sustainable and more productive society through the impact our customers have in the communities they serve. To accomplish this, we will remain dedicated to meeting our customers' needs and delivering products and experiences that deliver positive impacts'.
'We're putting our technology and industry experience in the hands of exceptional operators with a strong regulatory telematics base, demonstrated success in commercial scaling, and in user experience design. All while staying in New Zealand. The future looks very promising!' says Pellett.
'This growth strategy has great potential for our people, our shareholders and most of all our customers. It creates the opportunity for enormous upside and faster growth. We must make sure we achieve that potential, and to do that we need everyone on board, committed and excited. Our bright future together is going to accelerate at pace' says Newman.
Until approved, we remain separate
The acquisition is expected to complete in H2 FY22, as it is subject to Shareholder, New Zealand Commerce Commission approval and Overseas Investment Office consent. Until the deal is approved in all regions and settlement occurs, EROAD and Coretex remain separate and must continue to operate as they did before the announcement. Both businesses cannot share pricing or jointly market or sell products.
Upon completion, Selwyn Pellett (current Coretex CEO) will join the EROAD Board as an Executive Director. During this time, Selwyn will be an advisor to Steven Newman (who remains EROAD's CEO) to support the successful integration of the two businesses.
For further information or questions please reach out to your regular EROAD contact directly.
EROAD Limited published this content on 14 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 July 2021 00:08:06 UTC.