Verizon to buy GPS tracking company Fleetmatics for $2.4 billion

The logo of Verizon is seen at a retail store in San Diego, California April 21, 2016.

Reuters/Mike Blake/File Photo – RTSJQRX

Verizon Communications Inc said it will buy GPS vehicle tracking company Fleetmatics Group Plc for about $2.4 billion in cash to expand into the connected vehicle and fleet management market.

Verizon, the No. 1 U.S wireless company, will pay $60 per Fleetmatics share, a premium of about 40 percent to Friday’s close. The deal is expected to close in the fourth quarter of 2016.

Fleetmatics, which has its North American headquarters in Waltham, Massachusetts, develops software that shows fleet operators vehicle location, fuel usage, speed and mileage, and other data on their mobile workforce, Verizon said.

As the market for smartphones and mobile devices gets saturated, Verizon and its biggest rival AT&T Inc are hoping that connecting more objects and appliances to their networks will provide new revenue.

Fleetmatics shares soared 39 percent to $59.66 in premarket trading.

(Reporting by Malathi Nayak in New York and Ankur Banerjee in Bengaluru; Editing by Shounak Dasgupta and Jeffrey Benkoe)