Sirius XM to Acquire Connected Car Services Business for $530 Million
UPDATED: "As the world's leading provider of in-vehicle subscription services, Sirius XM is uniquely positioned to offer world-class end-to-end telematics services," says CEO Jim Meyer.
Sirius XM Radio said Thursday that it has agreed to acquire the connected vehicle services business of auto services firm Agero for $530 million in cash in a bet that drivers will increasingly use digital information and entertainment offerings.
The Agero unit is "the leading provider of innovative telematics services, offering safety, security and convenience services for drivers and end-to-end, turnkey solutions for automakers," Sirius XM, controlled by John Malone's Liberty Media, said. Its services include navigation services, safety and security features, but also location-based content offers.
Following the acquisition, which is expected to close in the fourth quarter, Sirius will provide connected vehicle services to more auto makers than any other telematics firm, according to the company.
"The acquisition of Agero's connected vehicle business is a natural fit for Sirius XM," said Sirius CEO Jim Meyer. "As the world's leading provider of in-vehicle subscription services, Sirius XM is uniquely positioned to offer world-class end-to-end telematics services."
He added: "The transaction accelerates Sirius XM's development in architecture supporting connected vehicle services, as well as the ability to provide services over both satellite and cellular networks."
Sirius has been developing its telematics offerings over the past few years in deals with the likes of Nissan and Ford.
"We also continue to make significant progress in developing our next-generation connected car platform and in driving our telematics business," Meyer said during a recent earnings conference call. "During the second quarter, we launched an in-car IP streaming app with Ford on the same platform. This feature allows Ford customers...to have two-way services, such as Sirius XM on-demand and personalized music through MyXM. It is a first step in creating an in-vehicle experience that harnesses both satellite and IT. Our effort with Ford is just the beginning."
He later added: "We want to be a leader in the connected car architecture as it rolls out. And I am going to remind you, this isn’t a phenomenon for next spring or next fall, this is a 10 year kind of thing. And so we want to be a part and play a key role as that architecture technology rolls out, so that we are able to pick and be a part of where there are potential service opportunities for us that nicely complement our audio business or enhance our audio business."
Agero said Thursday that the satellite radio firm is better suited to running its telematics business.
"As the automotive telematics industry has evolved, connected vehicle services have become increasingly focused on integration and infotainment, and we believe that Sirius XM is perfectly positioned to take these capabilities forward in this changing market," said Agero CEO Dave Ferrick. "While telematics has been an important and growing part of our business, this divestiture allows us to focus our resources in our roadside vehicle assistance, claims management and information services which will allow us to best serve our clients and their customers in a fast-changing marketplace."