Africa News: Control Instruments to merge fleet management business with Telimatrix

CI Group signed an agreement on May 21st with Matrix Group, whereby its subsidiary Control Instruments (CI) OmniBridge, Tripmaster and the recent acquisition of Datatrak UK, FM Europe and One-Stop-Shop from Siemens VDO (Datatrak) – collectively called “the CI fleet management business”, will be merged with Matrix Group.

CI Group was one of three original investors in the 1995 start-up of Matrix. Matrix is now one of the Big 3 vehicle tracking and recovery services in South Africa, the other two being Tracker and Netstar.

During a 2000 drive to dispose of all non-wholly owned subsidiaries, CI Group sold its stake in Matrix to the existing shareholders. Now, CI Group wants it back.

The CI Group will receive 50% of the Matrix Group’s total shareholding, valued at around ZAR650 million, and ZAR42 million in cash.

Matrix Group will be listed on the JSE, at which time CI Group will unbundle the majority of its shares in Matrix Group to CI Group shareholders.

The transaction is subject to completion of due diligence, and approval from the SA Reserve Bank, the competition authority and CI Group shareholders. The listing and the unbundling are subject to JSE approval.

Given the convergence of vehicle tracking and fleet management technology in the market place, the merger of the CI fleet management business and Matrix creates an opportunity to combine Matrix’s substantial existing annuity revenue stream with CI OmniBridge’s technology platform and product development capability.

The combined business will have a combined subscriber base of more than 165,000, a global distribution network in more than forty countries on six continents, its own presence in South Africa, the US, UK and Germany, and prominent brands, including VDO FM, Tripmaster FM and Matrix.

The strategy of the combined business is to leverage its strong, highly profitable and cash generating South African operations into the worldwide distribution network established and operated successfully by CI OmniBridge over the past ten years

The CI fleet management business and Matrix complement each other, with little overlap in the different market spaces in the greater vehicle tracking and fleet management technology markets in which they operate.

Synergistic opportunities include:

Matrix Group’s BEE alliance with Kagiso Ventures will enable the merged entity to aggressively pursue contracts in South Africa

The new business will be focused into all levels of fleet telematics, enabling it to grow both organically and via acquisitions

CI Group has spent ZAR420 million on acquisitions in the past two years:

In March 2006, CI Group acquired 51% of Tripmaster for US$3.5 million, giving CI its own North American distribution network. CI Group will acquire the outstanding 49% of Tripmaster prior to the merger of the its fleet management business with Matrix.

In November 2006, CI Group acquired the business of Cambridge, UK-based Pi Technology for £5 million.

In May 2007, CI Group acquired the distribution rights for FM Europe and the businesses and assets of Datatrak UK and One-Stop-Shop from Siemens VDO. The agreement is subject to final Reserve Bank approval, and the effective date is expected to be before end-June 2007.

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