As technology continues to increase in importance within the transportation industry, the once-distinct boundaries between verticals within the ecosystem are melting away. The future of transportation is decidedly about being connected, autonomous (different levels of it), and shared mobility. In such a scenario, data acquisition and its analytics become paramount, compelling businesses to invest heavily in mobility-related technology to make sure they stay relevant.
In what can be seen as a definitive step towards bolstering its presence in the “mobility solutions” segment, Bridgestone Europe N.V., a subsidiary of Bridgestone Corporation in the Europe, Middle East and Africa (EMEA) region, has announced its acquisition of digital fleet solution leader TomTom’s telematics business for €910 million (approximately $1.033 billion).
To understand the strategic importance of this acquisition, one has to understand the telematics market and TomTom’s position in it. The telematics market is expected to grow at a compound annual growth rate of 28.5 percent between 2017 and 2022, with total estimated market revenue of $233.24 billion by 2022.
Telematics is a crucial tool for fleets seeking to increase overall efficiency, as it lets them track vehicles in real-time, monitor driver behavior, and even understand fuel consumption. As Europe’s largest telematics provider, TomTom already sits at the top of the pyramid, helping Bridgestone hit the ground running. Statistically, TomTom monitors over 800 million GPS positions, 3.3 million trips, and 200 million inbound messages from across the globe each day.
Bridgestone is currently the world’s largest tire and rubber company, and its foray into telematics is not surprising, as this acquisition would provide Bridgestone the leverage to up-sell and cross-sell solutions to a broader customer base. That apart, Bridgestone will now try to help enhance its tire development and innovation programs by using TomTom’s phenomenally large telematics data set.
“We have found our perfect match in TomTom Telematics. Our complementary assets and capabilities will create a fleet solutions powerhouse and will further strengthen Bridgestone’s digital technology arm,” said Paolo Ferrari, CEO and President of Bridgestone EMEA and Executive Vice President of Bridgestone Group.
“Beyond scale, there will be considerable benefits by complementing our offerings, allowing us, among many other opportunities, to sell tires and solutions across our customers. We are now well-positioned in EMEA to accelerate our data-driven business, expand our fleet customer base and seize fast-growing, profitable opportunities in the automotive mobility industry.”
Meanwhile, Harold Goddijn, the CEO of TomTom, has mentioned that selling TomTom’s telematics division was a strategic decision and that the company will continue to invest in its map-making system. The new system will enable faster map updates and lower operational costs, helping “pave the road towards autonomous driving.”
The transaction is expected to be completed by the second quarter of 2019, with the acquisition being funded with available cash on Bridgestone’s balance sheet. Morgan Stanley is Bridgestone’s exclusive financial advisor on this deal, with Simmons & Simmons acting as its legal advisor.