Asia News: Ituran sells Telematics subsidiary for $90m

Asia News:  Ituran sells Telematics subsidiary for $90m

Ituran Location & Control has signed an agreement to sell its Telematics subsidiary to Singapore-based ST Electronics for US$90 million.

The proceeds from the deal are expected to be approximately $60 million, net of taxes, levies and other expenses.

In addition, based on various parameters, over the next five years Ituran will receive royalties from the revenues generated by Telematics' business in Korea and China.

The two companies will also sign an agreement that Telematics will be Ituran's provider of its location technology over the next ten years, and Ituran will provide Telematics with consultation and know-how in return for royalties.

In the first half of 2007, the Telematics business contributed $9.6 million in revenue and $2.8 million in operating profit to Ituran.

The deal is still subject to final closing conditions, including obtaining various regulatory and other approvals.

“ST Electronics is very well positioned in South East Asia, with a strong capacity to focus on and grow the business. Given this increased potential, over the next five years we are maintaining an economic interest in Telematics,” pointed out Ituran’s co-CEO, Eyal Sheratzski.

Ituran purchased the Telematics subsidiary for around US$10 million eight years ago, when the company believed it was important to own and have full control over the technology. As this technology has become more established, Ituran feels that it should now focus on its core competencies – providing location based services and applications.

In September 2006, Ituran acquired a 51% stake in E.R.M. Electronics, a vehicle security, tracking and GSM-based communications developer and manufacturer, for approximately US$2.8 million. In April 2007, Ituran acquired Israel-based GIS provider, Mapa, for approximately US$13 million.

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