Sirius poised to buy Agero's Connected Vehicle Services Unit for $530m in cash
(August 16, 2013. Nasdaq) — Sirius XM Radio, Inc. (SIRI) has agreed to buy the connected-vehicle-services business of Agero Inc. for US$530 million in cash, expanding the satellite-radio provider’s automotive offerings.
Agero’s connected-vehicle unit provides in-vehicle connectivity and technology services, including safety and security measures, data and diagnostics, and navigation.
Sirius provides audio entertainment and data services in more than 50 million vehicles and evidently sees connected-vehicle services as a key piece of the auto industry’s future.
“The transaction accelerates SiriusXM’s development in architecture supporting connected vehicle services, as well as the ability to provide services over both satellite and cellular networks,” said Sirius chief executive, Jim Meyer.
Agero, which also provides other vehicle-related services, said that while connected-vehicle services has been a growing part of its business, the divestiture will allow it to focus resources on roadside vehicle assistance, claims management and information services.
Sirius has been benefiting from strong subscriber revenue growth, and has said improved automotive sales helped drive recent growth in subscriber rolls. The company has about 25 million subscribers.
Last month, Sirius said second-quarter earnings dropped sharply, despite higher revenue, as the company’s year-earlier period included a benefit from a reversal of deferred income-tax valuation allowances.
The deal is expected to close in the fourth quarter. Shares closed on Wednesday at $3.76 and were inactive premarket. The stock is up 30% so far this year.