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William Blair Doesn't See A Higher Competing Bid Interrupting Verizon-FleetMatics Deal

William Blair Doesn't See A Higher Competing Bid Interrupting Verizon-FleetMatics Deal - FLTX, Verizon Communications Inc. NYSE:VZ

On Monday morning, Verizon Communications Inc. VZ 1.64% agreed to purchase FleetMatics Group PLC FLTX 38.71% at $2.4 billion, or $60.00 a share, in cash following Verizon's Yahoo! Inc. YHOO 1.6% take-out last Monday for $4.83 billion.

The FleetMatics deal is expected to close in the fourth quarter of 2016.

Blair Applauds The Deal For Verizon

As a result of recent shares' run-up in FleetMatics, William Blair's Bhavan Suri downgraded FleetMatics Group from Outperform to Market Perform with a price target of $60.00.

Although Suri believes Verizon's purchase price of Fleetmatics was "low," he does not see higher competing bids in the future, as only a limited set of companies would be interested in consuming a deal of FleetMatics' size.

In Suri's view, the strategic value for Verizon was "high given that it has already invested in two other telematics business in Telogis and Hughes Telematics."

Additionally, there are plenty of smaller telematics companies that could be acquired rather than starting a bidding war with Verizon of FleetMatics.

According to TipRanks, Bhavan Suri is one of the better analyst's covering FleetMatics, with a 61 percent success rate and a +7.0 percent average return.

At the time of writing, FleetMatics traded at $59.59, up 38.69 percent Monday.

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DateFirmActionFromTo
Jun 2016Morgan StanleyInitiates Coverage onOverweight
Jun 2016BairdInitiates Coverage onOutperform
May 2016Pacific CrestUpgradesOverweight

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