Verizon Communications Buys Hughes Telematics for $612M in Cash

Verizon Communications Inc. (VZ) announced today that they are acquiring Hughes Telematics Inc. (HUTC) for $612 million in cash. This is a big move for a US wireless carrier to enter the Machine to Machine communications space as an end to end application provider.verizon Verizon Communications Buys Hughes Telematics for $612M in Cash

Verizon will pay $12 a share in the acquisition, which is expected to close during Q3 of 2012, the New York-based company said in a statement today.

Hughes is based in Atlanta, GA and sells products that offer GPS tracking, safety and communications features for cars. One of their divisions offers fleet tracking services for US fleets and another offers an in-vehicle entertainment service for Mercedes under the name mBrace.

As with many US carriers, Verizon has been under pressure to increase revenues as voice services have reached a saturation point in the United States. The announcement follows a recent acquisition of another Machine to Machine provider, nPhase, by Verizon earlier this year. The offer represents a premium of 176% of Hughes’s trading price as of yesterday at $4.35 per share. Hughes shares nearly tripled to close at $11.79 in New York. Hughes reported revenues of nearly $71.3 million and a loss of $85.3 million during 2011.