In a bet on the future of in-vehicle data, entertainment and diagnostic services, Polaris Acquisition Corp., a blank-check company that went public in January, Monday merged with OnStar rival Hughes Telematics.
Private equity firm Apollo Global Management, which invested about $90 million into Atlanta-based Hughes Telematics, will maintain its roughly 54 percent stake in the combined company under the deal.
Apollo has stakes in a broad range of companies, including Realogy, the parent of real estate firms like Century 21 and Coldwell Banker, Norwegian Cruise Lines and Sirius Satellite Radio.
In April, Purchase, New York-based Apollo, founded by investor Leon Black, 56, filed for a $418 million initial public offering on the New York Stock Exchange. If successful, Apollo would join Stephen Schwarzman’s Blackstone Group in the vanguard of publicly traded private equity shops.
After the merger, the value of Hughes Telematics will be $699 million, according to a presentation at the announcement, and current management will maintain “day-to-day” control. The name of the new combined public company has yet to be chosen.
Hughes Telematics has agreements to provide telematics for cars and SUVs of Chrysler and Mercedes-Benz, the two parts of the former Daimler-Chrysler. Hughes systems are scheduled start appearing in Chrysler and Mercedes vehicles in North America beginning in the second half pf 2009.
In January, Polaris staged an IPO that netted the company $143.4 million. Under the deal, Polaris will contribute about $140 million toward its merger with Hughes.
“Blank-check” companies, also known as a special-purpose acquisition companies, or SPACs, are shell companies that raise money through an initial public offering and then go on the prowl for public or private operating companies to acquire. If shareholders approve the acquisition, the merger goes forward.
Automotive telematics harnesses technologies like Bluetooth, GPS and cellular wireless to provide in-vehicle navigation, such as:
--real-time traffic and directions;
--hands-free calling and e-mail;
--crash notification;
--stolen vehicle assistance;
--news, weather and sports;
--gas information;
--remote diagnostics.
Hughes Telematics’ DriveConnected system is expected to offer a personal online portal to let users set up preferences for news, sports, and stocks.
General Motor’s OnStar has about five million subscribers and Ford has been promoting the voice-activated Sync system, developed by Microsoft, to control mobile phones and digital music.