Corporate News Blog - FLEETCOR Announces Sale of NexTraq to Michelin; Expects to Unify Its Core Payments Business Post-sale
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LONDON, UK / ACCESSWIRE / June 16, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for FLEETCOR Technologies, Inc. (NYSE: FLT). Michelin announced on June 14, 2017, that it has agreed to acquire NexTraq, a leading US provider of commercial fleet telematics, and a subsidiary of FLEETCOR Technologies, the pioneer of fuel cards and workforce payment products. NexTraq is currently the leading provider of GPS fleet management solutions for fleets of small commercial vehicles, ranging from 2 to 50 vehicles. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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The Announcement
According to Michelin, Telematics and Fleet management services are extensively growing segments and represent an important sector for its overall growth plans. This acquisition is viewed as a strategic expansion by Michelin as it accelerates its growth in the telematics segment with synergies that increase the scale and expands its geographic footprint and strengthen the overall competitiveness in fleet management technology and services in the United States.
FLEETCOR views this announcement as a unification of its operations. The Company has enabled the growth of NexTraq's operating income by about 400% since it acquired NexTraq in 2013 from Francisco Partners which acquired the Company in 2009 (then known as Discrete Wireless). NexTraq uses web-hosted Software as a Service (SaaS) solutions in integration with GPS-based hardware to help local fleet managers drive operational efficiencies and reduce costs in their geographically dispersed mobile fleets.
Initially, FLEETCOR believed that the telematics solutions from NexTraq, aimed at serving commercial fleet clients, were complementary to its fuel card solutions. However, post this announcement, the Company believes that there is insufficient synergy with NexTraq, regarding its core payments business, and hence exploring a sale was crucial for the Company. NexTraq currently has a workforce of 117 employees, about 7,000 fleet customers, and 116,000 individual subscribers, and will be operated independently under Michelin North America. It also helps monitor reckless driving and stops texting while driving, and offers added scale to Michelin's long-term strategy towards road safety.
Company Growth Prospects
Michelin is the leading tire manufacturer, headquartered in Clermont-Ferrand, France, and it has operations in around 170 countries. The Company currently serves 117,700 employees and holds about 68 production facilities in 17 countries under its portfolio, which collectively produced around 187 million tires in 2016.
This announcement from FLEETCOR comes on the heels of the recent major corporate shift, where Ashley Thekkekara was named the head of the Company's North America local fuel card business, on May 31, 2017. On July 01, 2017, Mr. Thekkekara assumed the responsibility of the local fuel card business from Todd House who announced his intention to resign from the post.
FLEETCOR is a leading firm delivering fuel cards and workforce payment products to businesses and enterprises. The Company acquired Cambridge Global Payments on May 01, 2017, which is a leading international B2B payments provider. Cambridge, currently processes over $20 billion in B2B cross-border payments annually, where it helps 13,000 business clients make international payments to suppliers and employees. This agreement offered immediate cash EPS accretion for FLEETCOR with a long-term EPS growth potential. Also, this acquisition offered FLEETCOR the entry into the $145 billion B2B cross-border payments market. The acquisition was executed for about $675 million where the transaction was expected to close in Q3 FY17.
Last Close Stock Review
On Thursday, June 15, 2017, the stock closed the trading session at $144.51, dropping 1.40% from its previous closing price of $146.56. A total volume of 752.33 thousand shares have exchanged hands. FLEETCOR Technologies' stock price advanced 3.54% in the last one month. Furthermore, since the start of the year, shares of the Company have gained 2.11%. The stock is trading at a PE ratio of 29.56 and currently has a market cap of $13.34 billion.
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