Michelin Enters Fleet Telematics with €520 Million Brazilian Acquisition

Michelin yesterday announced that it intends to acquire Sascar, a leading Brazilian fleet management and freight security company for a total price of €520 million.

The São Paulo-based company, which has 870 employees, generated revenue of BRL 280 million (around EUR 91 million) in 2013 and has enjoyed robust average growth of 16% over the past three years, with solid and consistent performances (EBITDA of 37% in 2013).

Sascar monitors 230,000 vehicles (190,000 trucks and 40,000 passenger vehicles) from 33,000 customers.

According to IDC (2012) Sascar owns 23 percent of the fleet management market in Brazil, mostly small to mid-size fleets (only 5 percent of its customers have more than 20 vehicles monitored).

The enterprise value, which stands at BRL 1,600 million (around EUR 520 million), includes the purchase price of BRL 1,353 million (around EUR 440 million) and BRL 247 million (around EUR 80 million) in debt, These amounts will be adjusted when the acquisition closes.

The acquisition is subject to approval from the Brazilian competition authorities.

Michelin Telematics Strategy

Michelin sees truck telematics as a growth opportunity, not only in Brazil, but worldwide.

“Services are essential to Michelin and a key lever driving future growth and profitability,“ the company wrote in its presentation to financial analysts yesterday.

"Michelin will benefit from the client base and technical and marketing skills built up by Sascar in the rapidly expanding telematics market for professional truck fleets and thereby accelerate the development of services for its customers worldwide", explained Jean-Dominique Senard, CEO of the Michelin Group. "This will help us strengthen an important area of growth for the Group.“

See below a slide deck from Michelin which was presented yesterday to financial analysts:

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