Sirius XM Radio Inc (NASDAQ:SIRI) forays into telematics segment with Agero’s unit buy
Sirius XM Radio Inc (NASDAQ:SIRI), the United States-based satellite radio broadcaster, has announced its decision to buy the connected-vehicle-services business of Agero Inc. for $530 million in cash.
With this acquisition, Sirius XM Radio expects to expand its automotive offerings. The connected vehicle unit provides telematics services, offering security services in cars.
The acquisition will allow SiriusXM provide connected vehicle services to more automotive manufacturers, including BMW, Acura, Honda, Nissan, Toyota, Lexus, Nissan and more and Toyota.
SiriusXM offers audio entertainment and data services in more than 50 million vehicles.
Sirius has been facing tough competition from the likes of Pandora Media Inc. and Apple Inc. The company is, therefore, venturing into new segments so as to make itself in a healthy position. Agero’s connected-vehicle-services unit allows SiriusXM to foray into the growing telematics segment that will help the company sustain its growth momentum.
On September 3, 2013, the company will redeem all of its outstanding 8.75% Senior Notes due 2015 and aims to use the proceeds to fund the redemption. About $753,487,000 of the 8.75% Notes remains outstanding as of August 1, 2013.
With over 25 million subscribers, Sirius XM Radio Inc is present in vehicles from every major car manufacturer in the United States. The company also offers its programming on smartphones and other connected devices. The Sirius XM Internet Radio App is available on Android, Apple, and BlackBerry devices.
For its second quarter 2013, Sirius XM Radio reported record revenue of $940 million, up 12% year-over-year. The company’s net income was $126 million. For full fiscal year, Sirius XM expects revenue of over $3.7 billion. The company targets total net subscriber additions of approximately 1.5 million and self-pay net subscriber additions of approximately 1.6 million.