I.D. Systems Inc. agreed to acquire all the outstanding shares of Pointer Telocation Ltd., an Israel-based provider of mobile resource management products and services for the automotive, insurance and logistics industries, for roughly $140 million.
The consideration will comprise roughly $72 million in cash and about 11 million shares of a newly created holding company called PowerFleet Inc., which will serve as the parent company of I.D. Systems and Pointer.
Pointer shareholders will receive $8.50 in cash and 1.272 shares of PowerFleet common stock for each share of Pointer common stock they own, reflecting an approximately 50% cash and 50% stock consideration, and a total consideration of approximately $16.44 per share, based on I.D. Systems' March 12 closing stock price. As part of the transaction, each I.D. Systems share will be exchanged for one share of PowerFleet's common stock.
Woodcliff Lake, N.J.-headquartered I.D. Systems will fund the transaction using a combination of a $50 million convertible preferred equity investment from Boston-based private equity firm Abry Partners LLC and a $30 million debt financing from Bank Hapoalim.
John Hunt and Anders Bjork, managing partner and principal, respectively, of Abry Partners, will join PowerFleet's board upon the closing of the investment, along with Pointer CEO David Mahlab who will join the board upon the closing of the acquisition, which is expected to occur in the summer. Hunt and Bjork will replace Ken Brakebill and Christopher Formant.
The combined company, which will have more than $20 million in cash on hand and credit facilities upon the closing of the acquisition, will be rebranded as PowerFleet, with dual listing on the Nasdaq and Tel Aviv Stock Exchanges. Pointer Telocation and Cellocator brands will remain the international go-to-market brands, according to a release.
I.D. Systems, which provides wireless machine-to-machine solutions for securing, controlling, tracking and managing high-value enterprise assets, expects to realize approximately $3.5 million of cost savings within the first 12 to 18 months following the close of the acquisition.
Canaccord Genuity is I.D. Systems' financial adviser on the deal, while Olshan Frome Wolosky LLP and Goldfarb Seligman & Co. are the legal advisers.
ROTH Capital Partners serves as Pointer's financial adviser, while ZAG-S&W LLP is acting as its U.S. and Israeli legal adviser.
Lowenstein Sandler LLP and Meitar Liquornik Geva Lesham Tal are acting as legal advisers to Abry Partners.