Bridgestone Europe NV/SA, a subsidiary of Bridgestone Corp. in Europe, the Middle East and Africa (EMEA), has entered into an agreement with TomTom to acquire its telematics business, for a cash consideration of €910 million (approximately $1 billion US).
The transaction will bring together the world’s largest tire and rubber company with the No. 1 provider of digital fleet solutions in Europe, creating a leading data platform for connected vehicles. TomTom Telematics will accelerate Bridgestone’s drive to become a mobility solutions leader in the region, and the combination of both companies’ offerings will allow Bridgestone to cross-sell tires and solutions to a larger customer base. In addition, Bridgestone says the data access will enhance its virtual tire development and testing as well as connected tire innovation, benefiting all customers, including OEMs.
New social, economic and technological megatrends are pushing the pace of change in the automotive industry and the future of vehicles is connected, autonomous, shared and electric. In that context, Bridgestone has identified digital mobility solutions and fleet solutions as a strategic priority. This is reinforced by the growing importance of fleets over individually owned vehicles for transportation of people and goods. Increasing demand in the transportation industry means that fleet owners and managers need to maximize productivity and minimize total cost of ownership more than ever.
This latest investment builds on previous work at Bridgestone to strengthen its digital capabilities in EMEA. Specifically, the company has built capabilities in data collection from sensors, data platforms and analytics. This has resulted in the launch of a range of digital solutions and applications such as Tirematics, Mobox, FleetPulse and Bridgestone Connect.
TomTom Telematics, a front-runner in a double-digit growth industry, fits Bridgestone strategically as it has a large and growing installed user base of 860,000 vehicles of which more than two-thirds are commercial. It has a tailored go-to-market system and a premium digital offering including WebFleet and NextFleet. Its strong underlying technologies based on data analytics rely on an open, scalable, secure and cloud-based platform. It handles, on average, more than 800 million GPS positions, 3.3 million trips and 200 million inbound messages per day.
Its platform enables customers such as commercial fleets, leasing companies or corporate fleets to make their operations more efficient. It also enables partnerships such as with OEMs because of the improved driver experience. TomTom Telematics’ management team has been successful in constantly growing its customer base and maintaining a profitable business year after year. The business also is well-positioned for future growth in fleet solutions and to develop new business models relying on software capabilities.
In announcing the deal, Bridgestone said it has “the perfect set of assets to accelerate the TomTom Telematics business,” citing its strong brand equity, large customer base, preferred supplier status at many of the world’s leading vehicle manufacturers and fleets, and 2,600 points-of-sale in EMEA. In addition, Bridgestone brings its R&D investment, and Rome-based Digital Garage dedicated to the development of digital mobility solutions to the deal as well.
“We recognize and respect the talent and skill of TomTom Telematics’ management team and its 670 employees. It’s our intention to foster and grow the business and support its current plans. We want TomTom Telematics to continue serving its customers as successfully as it has done over the past few years and take advantage of its No. 1 position in a fast-growing market.”
“After a thorough review of multiple strategic options, we have determined that the sale of TomTom Telematics to Bridgestone is in the best interest of both TomTom Telematics and our core location technology business,” said Harold Goddijn, CEO, TomTom. “We will continue to invest in our innovative map-making system, enabling faster map updates while lowering operational costs, paving the road towards autonomous driving.”
“TomTom Telematics is the No. 1 telematics service provider in Europe, and we continue to grow our installed base of vehicles we service globally,” said Thomas Schmidt, managing director, TomTom Telematics. “We look forward to accelerating our ambitious growth plan and seizing new opportunities as part of Bridgestone. In the meantime, we expect the transition to be seamless with no disruption for our customers, suppliers and employees.”
Upon closing, Bridgestone will acquire all issued and outstanding share capital of TomTom Telematics for a cash consideration of €910 million, subject to customary closing adjustments. The acquisition is being funded with available cash on the balance sheet and is expected to be EPS accretive in year one. It is only the telematics business unit of TomTom that is being acquired.
The transaction is anticipated to be complete in the second quarter of 2019. The transaction is still subject to the relevant regulatory approvals, the consultation with TomTom employee representative bodies, and approval of TomTom’s shareholders.
In connection with this transaction, Morgan Stanley is acting as exclusive financial adviser to Bridgestone and Simmons & Simmons is acting as legal adviser.