Omnitracs, which is backed by Vista Equity Partners, has agreed to buy transportation-technology company SmartDrive Systems.
The deal is valued at $450 million, Barron’s has learned. SmartDrive, which provides cameras and video-based technology that alerts trucking companies to dangerous environmental conditions such as high winds or construction sites. The technology also detects risky driver behavior like talking on cell phones, fatigue or when eyes aren’t on the road. SmartDrive uses AI and machine learning to process the data that helps companies avoid and learn from dangerous situations. It employs 850 people.
Founded in 2005, SmartDrive has raised $270.2 million in venture funding, according to Crunchbase. Most recently, Sixth Street Partners led a $90 million round for SmartDrive in September 2019, PitchBook said. Other investors include NewView Capital, Oak Investment Partners, WABCO, and Michelin.
The deal, which is expected to close by Oct. 1, will bring together two transportation technology companies. Omnitracs provides cloud-based fleet management and data analytics technology for its 13,000 trucking customers. The much smaller SmartDrive has 500 clients.
“In Omnitracs, we have a like-minded company, seeing the power of data for innovation and solving material fleet and transportation industry challenges,” said Steve Mitgang, SmartDrive CEO, in a statement.
The trucking industry is very fragmented. There were 36 million trucks registered and used for business purposes, excluding government and farming, in 2017, according to the American Trucking Associations. The ATA estimated that there were 1.2 million trucking companies in the U.S. in 2019. Of that, 97.2% operated fewer than 20 trucks. Omnitracs, which was acquired by Vista in 2013 for $800 million, is building out a software platform for the transportation industry. In May, it acquired VisTracks and Blue Dot Solutions in March 2019.
Video has “tremendous potential” to change the risk profile of the trucking industry but its penetration has been slow, said Ray Greer, Omnitracs CEO. Only 2% to 3% of the industry uses video, he said. SmartDrive, which has logged over 300 million critical events, has the largest library of risky driving videos in the world, he said.
Smart Drive’s technology has improved crash indicator scores by over 70%, which has reduced the severity of accidents by 30% to 40%, Greer told Barron’s.
“When you think about the role of technology in transportation, there’s no question that this will save lives,” he said. “AI and machine learning are only as good as the data and intelligence that they run on. Omnitracs’ scale, with over 13,000 customers, provides the data and intelligence which can unlock those benefits. In a market as fragmented as commercial trucking, no single carrier on its own can provide that scale.”
The investment was not the result of an auction. Omintracs had been interested in video technology advancements and determined SmartDrive to be one of the top players in the sector. Acquisition talks began at the beginning of 2020, Barron’s has learned.
Executives for Sixth Street and NewView declined to comment. Oak Investment Partners, WABCO, and Michelin couldn’t be reached for comment.
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