DBSI subsidiary Nexus Telocation Systems (OTCBB: NXUS) is expanding. Nexus, a developer of wireless-based vehicle information and locations systems, used to pinpoint stolen vehicles, among other things, has signed an MOU to acquire 86% of Pointer Software Systems, a vehicle location services company, for 27% of Nexus shares, valued at $18 million.
Nexus, which already owns 14% of Pointer Software, will acquire full ownership of the company. Partner Software's management estimates that the company, which operates a location-based services package in Israel as well as armored anti-theft solutions for vehicles, installs 40% of all vehicle location systems in Israel. Pointer Software competes against Ituran (TASE: ITRN).
Pointer Software reported an operating profit of NIS 1.5 million on NIS 44 million revenue in 2003. Revenue was 15% higher than in 2002. The company, which provides services for over 50,000 vehicles, predicts 20% annual growth in the coming years. To meet the anticipated demand, it has increased its purchases of Nexus's anti-theft vehicle locations systems. Last month, the two companies signed a four-year contract to supply $6-10 million worth of systems.
The contract, which included upgrading and expanding Pointer Software's communications infrastructure, should now be discounted, since Nexus's full acquisition of Pointer Software means that it is now selling goods to itself, rendering a profit on the transaction meaningless, since internal revenue is naturally cancelled.
Published by Globes [online] - www.globes.co.il - on March 10, 2004