NZX-listed Eroad inks deal to buy Kiwi telematics company Coretex

NZX-listed Eroad inks deal to buy Kiwi telematics company Coretex

Deal brings two New Zealand transport telematics technology leaders together.

Selwyn Pellett (Coretex and Imarda)

Selwyn Pellett (Coretex and Imarda)

Credit: Supplied

Auckland-based transport telematics business Eroad has entered into a conditional agreement to acquire vertical telematics specialist Coretex for $157.7 million plus a performance premium of $30.6 million.

The buyout will be partly funded by an underwritten conditional placement to raise $64.4 million and a share purchase plan to raise $16.1 million.

Coretex was co-founded by Auckland-based businessman Selwyn Pellett, who is also the company's CEO, and Dean and Craig Marris, now driving sales in North America.

It has quite a wide shareholding for a private company, with J E & A L Marris Trustees holding 15.6 per cent and Pellett holding 13.8 per cent alongside VC firm Movac, fund manager Milford and others.

The acquisition is expected to complete early in the second half of Eroad's 2022 financial year and is subject to three conditions: Commerce Commission clearance in relation to Coretex’s New Zealand business, Overseas Investment Office approval and Eroad shareholder approval.

In the year to 31 March, 2021, Eroad's revenue grew to $91.6 million, up 13 per cent, while EBITDA also grew by 13 per cent to $30.7 million. The company had a market capitalisation of just over $500 million today.

"On behalf of the Board of Eroad, I am pleased to outline how this accelerates Eroad’s key growth metrics by two years enabling it to capture the significant growth opportunity in North America and Australia," chair Graham Stuart told shareholders, recommending they vote in favour of the transaction..

Coretex, which has offices in New York, San Diego, Auckland and Sydney, was focused on growth verticals of less than a truck load (LTL), refrigerated transport, construction, and waste and recycling and had a well advanced pipeline of North America enterprise customers.

"Both Eroad and Coretex aspire to create a safer, more sustainable and more productive society. Eroad’s customer solutions not only help to reduce speed, ensure vehicles are safe and improve driver behaviour, but they also help our customers achieve greater fuel efficiency, reduce compliance costs and improve fleet productivity," Stuart said.

Coretex’s specialist products complemented EROAD’s solutions, he said. It's refrigerated transport solutions optimised compliance, safety and fuel consumption to help reduce wastage and emissions. 

Coretex's construction solutions helped reduce construction and industrial wastage while its waste and recycling solutions helped reduce contamination.

"Coretex brings with it a broadened product fit and new strategic high growth key verticals. Combining Eroad’s broadly adopted regulatory telematics solutions with Coretex’s vertical market expertise and products creates an advanced market fit."

Eroad is now in a trading halt pending an announcement about completion of a placement capital raise or by market opening tomorrow.

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Tags telematicsEROADCoretex




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