Combination Expected to Create Top-Tier Global
Provider in Mobile Asset IoT Industry with Unparalleled Artificial
Intelligence Enhanced SaaS Solution Portfolio
~1.7 Million Combined Subscriber Base Expected
to Provide Immediate Scale
Expected to Create a Day One Business with
Total Revenue of $279 Million,
Including $210 Million of Recurring
High-Margin SaaS Revenues and Combined Service Gross Margins of
67%
In Addition to Organic Growth,
Combination is Expected to Unlock Significant Annual EBITDA
Expansion Within First Two Years
Expected to Deliver Significant Cross-Sell and
Upsell Opportunities for Powerfleet's Unity Platform, Modular
Software, and AI-Driven Data Solutions into Combined Base of 7,500
Enterprise Customers
Leadership Teams to Host Joint Conference Call
Today, October 10, 2023 at
8:30 AM ET
Joint Investor Day Scheduled for
Thursday, November 16, 2023 in
New York City. Further Details
Will Be Communicated Shortly
WOODCLIFF LAKE, N.J.,
Oct. 10, 2023 /PRNewswire/ --
PowerFleet, Inc. (Nasdaq: PWFL) and MiX Telematics
Limited (NYSE: MIXT, JSE: MIX) today announced that
they have entered into a definitive agreement to form one of the
largest mobile asset Internet of Things (IoT) Software-as-a-Service
(SaaS) providers in the world. This powerful combination will form
a scaled, global entity of choice focused on helping customers save
lives, time, and money by solving mission-critical business
challenges including safety and risk management, compliance,
sustainability, and operational efficiency.
BUSINESS COMBINATION SUMMARY AND KEY DEVELOPMENTS
- Combined business with total revenue of $279 million, including $210 million in recurring high-margin SaaS
revenue and $39 million of adjusted
EBITDA for the trailing twelve-month (TTM) period ended
June 30, 2023 (excluding selected
non-cash and non-recurring items).
- The transaction is expected to close in the first quarter of
calendar year 2024.
- Upon close, the combined business will be branded as
Powerfleet, with its primary listing on Nasdaq.
MANAGEMENT COMMENTARY
"By leveraging our proven SaaS
strategy across the combined business, spearheaded by our Unity
platform and data highway, we firmly believe we will be extremely
well positioned to drive incremental market consolidation.
Realizing transformative scale, this transaction with MiX will
provide the go-forward company with 1.7 million subscribers, and
the ability to sell additive and accelerated AI and data-powered
software solutions to a truly global set of customers," said
Steve Towe, Powerfleet's Chief
Executive Officer, who will continue serving as CEO of the combined
Powerfleet company. "This combination is expected to achieve a
number of strategic objectives including unlocking strong
incremental value creation opportunities; a refinanced balance
sheet for the combined company that will provide more flexibility
to execute our strategic growth initiatives; and the ability to
retain and attract an expanded portfolio of shareholders. Combining
with MiX, an extremely well-run and profitable organization, will
establish the combined entity as a world-class SaaS company, giving
us the speed and capability to achieve improved growth in high
quality recurring revenues and expanded profitability much
sooner."
Stefan Joselowitz, Chief Executive Officer at MiX Telematics,
intends to retire at the conclusion of this transaction, but plans
to continue to be a shareholder of the new combined entity.
Joselowitz added, "I am extremely proud of our heritage and the
high-quality business MiX is today, and I am delighted to have
finally found an ideal partner that shares our values and strategic
goals to take the company to the next level. We strongly believe
that Powerfleet's Unity strategy and our combined scale perfectly
positions us to revolutionize the mobile asset IoT SaaS industry
and drive transformative growth. As a shareholder I am very excited
about how this combination will accelerate the achievement of our
shared strategic goals."
STRATEGIC RATIONALE
Compelling benefits expected from
the transaction:
- Enhanced Shareholder Value: The transaction will
immediately increase value to our existing and prospective
shareholders with combined total revenue of $279 million and $39
million of adjusted EBITDA. The stronger balance sheet
paired with the growth-centric capital structure is expected to
propel the combined entity towards ambitious and achievable growth
goals, including "Rule of 40" performance.
- Market Leadership: The combined company will create a
top-tier mobile asset IoT SaaS organization with significant scale,
serving all mobile asset types. The increased scale is expected to
enable the combined entity to more efficiently serve our customers
and create advantage to compete in an industry characterized by the
need for high pace of development and innovation.
- Scale and Data Strategy: With a combined base of
approximately 1.7 million subscribers following the transaction,
the joint entity is expected to achieve significant scale as well
as enhance our Unity platform strategy - including our AI-led data
harmonization and integration capabilities.
- Research and Development Excellence: By integrating the
Powerfleet and MiX world-class engineering and technology teams,
the combined organization is expected to accelerate the delivery of
top-class solutions with improved competitive advantage.
- Go-to-Market Acceleration and Increased Reach: Our
combined geographical footprint, deep vertical expertise, and
expanded software solution sets coupled with our extensive direct
and indirect sales channel capabilities will enable us to maximize
significant cross-sell and upsell opportunities within our
impressive joint customer base.
- World-Class Talent: With more than 1,800 tenured and
talented team members worldwide, the combined entity will focus on
attracting and retaining top talent to deliver optimal value to our
customers.
TRANSACTION TERMS AND FINANCING
MiX shareholders will
exchange 100% of their outstanding MiX ordinary shares (including
MiX ordinary shares represented by MiX American Depository Shares
(ADSs), each of which represents 25 MiX ordinary shares) for
consideration consisting of Powerfleet common shares, payable at
closing. The number of Powerfleet common shares to be issued as
consideration will be based on a post-transaction ownership
structure, whereby current MiX shareholders will own approximately
65%, and current Powerfleet shareholders will own approximately 35%
of the combined entity immediately following the closing of the
transaction. This exchange ratio assumes all MiX issued ordinary
shares (including those represented by MiX ADSs) are exchanged for
common shares in Powerfleet.
In connection with the transaction, Powerfleet and MiX are
positioned to secure $75 million in
incremental debt which the companies anticipate will be fully
executed at or before close. The proceeds from the refinancing of
the combined company's balance sheet will be used to redeem in
full the outstanding convertible preferred stock held by affiliates
of Abry Partners. Transaction-related expenses will be paid from
cash on the balance sheet.
The closing of the transaction is subject to customary
conditions, including required approvals of regulatory authorities
and Powerfleet and MiX shareholders.
BOARD AND EXECUTIVE LEADERSHIP
Following the
transaction, Steve Towe will remain
CEO of Powerfleet and David Wilson
will remain CFO. Stefan Joselowitz, current CEO of MiX, will be
retiring.
A new board of directors of Powerfleet will be formed.
Michael Brodsky will be Chairman.
Steve Towe will be on the board.
Ian Jacobs, MiX Telematics' current
Chairman, will be joining the board. MiX will appoint one
additional board member and further board member appointments will
be made by mutual consent.
CONFERENCE CALL AND WEBCAST
Powerfleet and MiX
Telematics management will host a joint conference call to discuss
the transaction today, October 10,
2023 at 8:30 a.m. Eastern time
(5:30 a.m. Pacific time).
Toll Free: 888-506-0062
International: 973-528-0011
South Africa: 080-098-3458
Participant Access Code: 193766
Webcast
The conference call will be available for replay here.
If you have any difficulty connecting with the conference call,
please contact Gateway Group at 949-574-3860.
A supplemental slide presentation regarding the transaction will
be available on the investor relations section of each company's
website.
TRANSACTION ADVISORS
William
Blair & Company L.L.C. is acting as financial advisor,
and Olshan Frome Wolosky LLP and Webber
Wentzel are acting as legal advisors to Powerfleet.
Raymond James and Java Capital are
acting as financial advisors to MiX Telematics, and DLA Piper LLP
(US) and Java Capital are acting as legal advisors to MiX
Telematics. Gateway Group is acting as investor relations advisor
to Powerfleet and MiX Telematics.
RECONCILIATION OF EBITDA TO GAAP FINANCIAL MEASURE
|
|
PWFL 12-Months
Ended
|
|
MIXT 12-Months
Ended
|
|
Combined 12-Months
Ended
|
|
|
30-Jun-23
|
|
30-Jun-23
|
|
30-Jun-23
|
|
|
$'000
|
|
$'000
|
|
$'000
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to common stockholders
|
|
|
-7,227
|
|
|
5,451
|
|
|
-1,776
|
Non-controlling
interest
|
|
|
3
|
|
|
0
|
|
|
3
|
Preferred stock
dividend and accretion
|
|
|
5,062
|
|
|
0
|
|
|
5,062
|
Interest (income)
expense, net
|
|
|
1,607
|
|
|
1,007
|
|
|
2,614
|
Other (income)
expense, net
|
|
|
-24
|
|
|
0
|
|
|
-24
|
Income tax
(benefit) expense
|
|
|
1,395
|
|
|
7,153
|
|
|
8,548
|
Depreciation and
amortization
|
|
|
8,629
|
|
|
15,875
|
|
|
24,504
|
Stock-based
compensation
|
|
|
3,941
|
|
|
934
|
|
|
4,875
|
Foreign currency
translation
|
|
|
-1,094
|
|
|
463
|
|
|
-631
|
Severance related
expenses
|
|
|
1,380
|
|
|
-
|
|
|
1,380
|
Gain on bargain
purchase - Movingdots
|
|
|
(7,517)
|
|
|
-
|
|
|
(7,517)
|
Acquisition
related costs
|
|
|
540
|
|
|
784
|
|
|
1,324
|
Impairment of
long-lived assets
|
|
|
-
|
|
|
104
|
|
|
104
|
Net loss/(profit)
on sale of PP&E
|
|
|
-
|
|
|
4
|
|
|
4
|
Restructuring
costs
|
|
|
-
|
|
|
1,043
|
|
|
1,043
|
Contingent
consideration remeasurement
|
|
|
-
|
|
|
(528)
|
|
|
(528)
|
Adjusted
EBITDA
|
|
|
6,695
|
|
|
32,290
|
|
|
38,985
|
ABOUT POWERFLEET
Powerfleet (Nasdaq: PWFL; TASE: PWFL)
is a global leader of internet of things (IoT)
software-as-a-service (SaaS) solutions that optimize the
performance of mobile assets and resources to unify business
operations. Our data science insights and advanced modular software
solutions help drive digital transformation through our customers'
and partners' ecosystems to help save lives, time, and money. We
help connect companies, enabling customers and their customers to
realize more effective strategies and results. Powerfleet's tenured
and talented team is at the heart of our approach to partnership
and tangible success. The company is headquartered in Woodcliff Lake, New Jersey, with our Pointer
Innovation Center (PIC) in Israel
and field offices around the globe. For more information, please
visit www.powerfleet.com.
ABOUT MIX TELEMATICS
MiX Telematics is a leading
global provider of fleet and mobile asset management solutions
delivered as SaaS to over 1 million global subscribers spanning
more than 120 countries. The company's products and services
provide enterprise fleets, small fleets, and consumers with
efficiency, safety, compliance, and security solutions. MiX
Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the
United States, Uganda,
Brazil, Mexico and Australasia as well as a network of
more than 130 fleet partners worldwide. MiX Telematics shares are
publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and
the New York Stock Exchange (NYSE: MIXT). For more information,
visit www.mixtelematics.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking
statements within the meaning of federal securities laws.
Powerfleet's, MiX's and the combined business's actual results may
differ from their expectations, estimates and projections and
consequently, you should not rely on these forward-looking
statements as predictions of future events. Words such as "expect,"
"estimate," "project," "budget," "forecast," "anticipate,"
"intend," "plan," "may," "will," "could," "should," "believes,"
"predicts," "potential," "continue," and similar expressions are
intended to identify such forward-looking statements.
These forward-looking statements include, without limitation,
the parties' expectations with respect to their beliefs, plans,
goals, objectives, expectations, anticipations, assumptions,
estimates, intentions and future performance, as well as
anticipated financial impacts of the proposed transaction, the
satisfaction of the closing conditions to the proposed transaction
and the timing of the completion of the proposed transaction.
Forward-looking statements involve significant known and unknown
risks, uncertainties and other factors, which may cause their
actual results, performance or achievements to be materially
different from the future results, performance or achievements
expressed or implied by such forward-looking statements. All
statements other than statements of historical fact are statements
that could be forward-looking statements. Most of these factors are
outside the parties' control and are difficult to predict. The
risks and uncertainties referred to above include, but are not
limited to, risks related to: (i) the completion of the proposed
transaction in the anticipated timeframe or at all; (ii) the
satisfaction of the closing conditions to the proposed transaction
including, but not limited to the ability to obtain approval of the
stockholders of Powerfleet and shareholders of MiX and the ability
to obtain financing; (iii) the failure to obtain necessary
regulatory approvals; (iv) the ability to realize the anticipated
benefits of the proposed transaction; (v) the ability to
successfully integrate the businesses; (vi) disruption from the
proposed transaction making it more difficult to maintain business
and operational relationships; (vii) the negative effects of the
announcement of the proposed transaction or the consummation of the
proposed transaction on the market price of MiX's or Powerfleet's
securities; (viii) significant transaction costs and unknown
liabilities; (ix) litigation or regulatory actions related to the
proposed transaction; and (x) such other factors as are set forth
in the periodic reports filed by MiX and Powerfleet with the
Securities and Exchange Commission ("SEC"), including but not
limited to those described under the heading "Risk Factors" in
their annual reports on Form 10-K, quarterly reports on Form 10-Q
and any other filings made with the SEC from time to time, which
are available via the SEC's website at http://www.sec.gov. Should
one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by these
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements.
The forward-looking statements included in this press release
are made only as of the date of this press release, and except as
otherwise required by applicable securities law, neither MiX nor
Powerfleet assumes any obligation nor do they intend to publicly
update or revise any forward-looking statements to reflect
subsequent events or circumstances.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In
connection with the proposed transaction, Powerfleet intends to
file with the SEC a registration statement on Form S-4 that will
include a joint proxy statement of Powerfleet and MiX and a
prospectus of Powerfleet. Furthermore, Powerfleet intends to
procure a secondary inward listing on the Johannesburg Stock
Exchange to accommodate existing and future South African
shareholders.
Additionally, MiX intends to prepare a scheme circular for MiX
shareholders in accordance with the Companies Act of South Africa (including the Companies Act
Regulations, 2011 thereunder) and the JSE's listings requirements
with respect to a shareholder meeting at which MiX shareholders
will be asked to vote on the proposed transaction. The scheme
circular will be issued to MiX shareholders together with the proxy
statement/prospectus. If you hold MiX ordinary shares through an
intermediary such as a broker/dealer or clearing agency, or if you
hold MiX ADSs, you should consult with your intermediary or The
Bank of New York Mellon, the depositary for the MiX ADSs, as
applicable, about how to obtain information on the MiX shareholder
meeting.
After Powerfleet's registration statement has been filed and
declared effective by the SEC, Powerfleet will send the
definitive proxy statement/prospectus to the Powerfleet
shareholders entitled to vote at the meeting relating to the
proposed transaction, and MiX will send the scheme circular,
together with the definitive proxy statement/prospectus, to MiX
shareholders entitled to vote at the meeting relating to the
proposed transaction. MiX and Powerfleet may file other relevant
materials with the SEC in connection with the proposed transaction.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE REGISTRATION
STATEMENT, JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY
REFERENCE THEREIN), THE SCHEME CIRCULAR AND OTHER DOCUMENTS THAT
MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
shareholders will be able to obtain free copies of these documents
(if and when available) and other documents containing important
information about Powerfleet and MiX once such documents are filed
with the SEC through the website maintained by the SEC at
www.sec.gov. Powerfleet or MiX make available copies of materials
they file with, or furnish to, the SEC free of charge at
https://ir.powerfleet.com and http://investor.mixtelematics.com,
respectively.
NO OFFER OR SOLICITATION
This communication shall not
constitute an offer to buy or sell any securities, or the
solicitation of an offer to buy or sell any securities, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION
Powerfleet, MiX and
their respective directors, executive officers and certain
employees and other persons may be deemed to be participants in the
solicitation of proxies from the shareholders of Powerfleet and MiX
in connection with the proposed transaction. Securityholders may
obtain information regarding the names, affiliations and interests
of Powerfleet's directors and executive officers in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC
on March 31, 2023, its amended Annual
Report on Form 10-K/A for the year ended December 31, 2022, which was filed with the SEC
on May 1, 2023, and its definitive
proxy statement for its 2023 annual meeting of stockholders, which
was filed with the SEC on June 21,
2023. Securityholders may obtain information regarding the
names, affiliations and interests of MiX's directors and executive
officers in its Annual Report on Form 10-K for the year ended
March 31, 2023, which was filed with
the SEC on June 22, 2023, and its
definitive proxy statement for its 2023 annual general meeting of
shareholders, which was filed with the SEC on July 28, 2023. Other information regarding the
participants in the proxy solicitations and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC regarding the proposed
transaction when such materials become available. Investors should
read the joint proxy statement/prospectus carefully when it becomes
available before making any voting or investment decisions. You may
obtain free copies of these documents from Powerfleet or MiX using
the sources indicated above.
Powerfleet Investor Contact
Matt Glover
Gateway Group, Inc.
PWFL@gateway-grp.com
+1 (949) 574-3860
Powerfleet Media Contact
Andrea Hayton
ahayton@powerfleet.com
+1 (610) 401-1999
MiX Telematics Investor Contact
Cody Cree
Gateway Group, Inc.
+1 (949) 574-3860
MIXT@gateway-grp.com
MiX Telematics Media Contact
Jonathan Bates
jonathan.bates@mixtelematics.com
+44 7921 242892
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