EROAD (ASX:ERD) to acquire Coretex

Company News

by Adrian Tan

EROAD (ASX:ERD) has entered into a conditional agreement to acquire Coretex for up to NZ$188.3m.

EROAD is a New Zealand-headquartered telematics company that focuses on products for safety and fleet management, in particular heavy vehicles. It provides electronic systems for compliance with road charges, taxes, and health and safety regulations. A core element of EROAD’s system is its electronic distance recorder, the Ehubo, which sits within vehicles and transmits encrypted data via a cellular network.

Among Coretex's fleet management solutions are its CoreHub units, which collect data on vehicle activity from multiple wireless sensors. This allows the tracking of such things as temperature alerts for refrigerated transport, concrete mixer drum rotations, water levels and dash cam recordings.

The acquisition is expected to complete in early H2 FY22. It involves an upfront consideration of NZ$157.7m (NZ$79.9m in scrip and NZ$77.8m in cash). Up to a further NZ$30.6m is payable contingent on a number of terms, including performance milestones like retention of customers post transaction, revenue targets and rollout of CoreHub units.

The acquisition will be funded by a NZ$64.5m placement, a NZ$16.1m share purchase plan and NZ$11.8m of existing cash.

EROAD CEO Steven Newman comments: "The acquisition of Coretex is truly transformational for EROAD. Accelerating our key growth metrics by two years in North America and Australia and positioning us to become a bigger player in the global telematics market."

Shares in EROAD (ASX:ERD) closed 0.7 per cent higher at $5.78 yesterday. 

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