In an effort to grow its asset tracking business, Chicago-based M2M firm Telular has agreed to acquire privately-held SkyBitz (News - Alert) for $42 million in cash and stock.

SkyBitz, a provider of mobile resource management solutions for the tracking of assets on tractor trailers, rail cars and sea vessels, boasts a proprietary SAAS technology platform and a broad customer base that Telular (News - Alert) believes will help it become the largest “pure player” asset tracking and management.

The $42 million purchase price seems reasonable considering SkyBitz expects to generate around $35 million in revenue for the current fiscal year ending in December. In addition, the company anticipates recording net income before non-cash items of approximately $5 million.

The agreement will include $35 million in cash ($30 million of which will be financed through a five-year bank loan) and $7 million in newly issued common stock. The deal is expected to close early in 2012 following approval from the FCC (News - Alert). Telular believes the deal will have a positive financial impact on its 2012 non-GAAP net income.

“The acquisition of SkyBitz…gives us the leading position in an adjacent M2M vertical market, provides immediate incremental cash flow and builds upon our stream of high-margin, recurring service revenues,” Joseph Beatty, president and chief executive officer of Telular Corporation (News - Alert), noted in a statement.

“Combined with Telular's existing portfolio of Telguard and TankLink services, we can address a much larger market opportunity and expand our technology base with satellite communications capabilities that will complement our historical expertise in cellular communications,” he added.

Beatty anticipates that the move will help result in a quarterly dividend being paid out to shareholders – one that will represent a “tangible return.”

Current SkyBitz CEO Homaira Akbari is expected to remain with Telular as the new president of the SkyBitz business unit. Other key executives will also make the transition.

In other M&A news, SAP (News - Alert) has agreed to acquire cloud-based human resource management software SuccessFactors for $3.4 billion in cash. The German software vendor will leverage SuccessFactors' assets to expand its cloud strategy and stave off competition from rival Oracle.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell