San Diego-based Novatel Wireless Inc. signed an agreement to sell its telematics hardware business to Micronet Enertec Technologies Inc. for $24 million.
This technology is similar to black boxes in a vehicle and tracks driver behavior and vehicle diagnostics. The company is moving toward becoming more of an Internet of Things provider, transitioning from hardware-centric to software as a service and solutions-focused. This will not affect the company’s MiFi wireless hot spot product.
Upon the closing of the deal, Novatel will receive $12 million in cash and two payments of $6 million on the first and second anniversaries of the transaction’s completion. Novatel and Micronet will enter into a manufacturing and supply agreement, where Novatel will purchase Micronet products following the transaction, according to the Novatel’s press release.
The deal is expected to close by the end of the first quarter of this year. The boards of both companies have already approved the proposed transaction. Yet to be decided are the manufacturing and supply agreements, Micronet financing to complete the transaction, employees crossing over to Micronet and customary closing conditions.
Novatel has had a major transformation in the last 18 months, with a new chief executive officer and a couple of acquisitions