Lessons of the Non-Tech Acquiring Tech Deal Of The Month

September 2021: Bridgestone Americas acquires Azuga for $391 million

Tyres


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Tech – Azuga: 

Founded in 2012 in the United States, Azuga is a developer of fleet management platforms intended to empower customers with GPS tracking, video telematics, driver behaviour management and accident reduction software to track and manage their fleets. The company's SaaS applications, support and data analytics help commercial fleets, government agencies, insurance companies and automotive industry suppliers to turn data about vehicles and their use into intelligence that improves operations and safety while reducing costs and risk.

Non-Tech – Bridgestone Americas: 

Bridgestone Americas is a subsidiary of Bridgestone Corporation, a global leader in sustainable mobility and advanced solutions. Bridgestone Americas manages a diverse portfolio of original equipment and replacement tires, tire-centric solutions, mobility solutions, and other rubber-related products. The company operates 50 production facilities across the globe.

SUSTAINABLE MOBILITY SOLUTIONS

First announced in August 2021, Bridgestone Americas (Bridgestone) stated it has completed the acquisition of Azuga Holdings, Inc. (Azuga) and the Azuga fleet management platform from Sumeru Equity Partners, Danlaw, Inc. and other shareholders. The techcquisition, valued at $391 million, accelerates Bridgestone’s efforts to develop and deploy a comprehensive fleet management solution as a central pillar of the company’s advanced mobility strategy.

Featuring GPS tracking, video telematics, driver behaviour management and accident reduction solutions for insurers, the Azuga platform promises to improve business performance, reduces fuel consumption, and decreases wear and tear on vehicles. Azuga currently supports more than 6,000 customers in the U.S. and Canada in the commercial trucking and insurance industries, as well as the public sector.

"Azuga is revolutionizing the way fleets do business in the U.S. with class-leading software and a rapid innovation process that will further advance Bridgestone’s vision to be a sustainable solutions company.”
- Paolo Ferrari, president & CEO, Bridgestone Americas, and Global Chief Solutions Business Officer, Bridgestone Corporation

The Azuga fleet management platform complements Bridgestone’s existing portfolio of cloud-based fleet mobility solutions, and Bridgestone will intend to leverage Azuga’s robust data capture capabilities to advance the development of its core tire products and sustainable mobility solutions.

“We are working toward providing the most sustainable and intelligent solutions for safer and more efficient mobility, and Azuga will help us accelerate their development and deployment to our customers.”

- Paolo Ferrari, president & CEO, Bridgestone Americas, and Global Chief Solutions Business Officer, Bridgestone Corporation

ANOTHER TECHQUISITION DEAL PAYS FOR ITSELF

Like most other techquisition deals, the market reacted favourably to the Azuga announcement given the positive outlook associated with the strategic potential of the techquisition and how it fits with Bridgestone Americas’ mobility solutions strategy.

On 2 August 2021, Bridgestone Americas announced that it will acquire Azuga. Bridgestone’s share price increased by approximately 7% from 3 August to 11 August 2021 - compared to an increase of approximately 1.6% in the Nikkei 225 during the same period - implying an addition of a net ca $1.7 billion to Bridgestone’s market capitalisation.

On this basis the deal paid for itself by ca 4x in terms of market expectations.
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INDUSTRY DISRUPTION

In the early days of the pandemic, manufacturers were hit hard with forced shutdowns, production slowdowns and serious questions about whether companies could navigate the disruptions. Today the world continues its rapid transformation. In manufacturing, the role of technology can be game-changing. However, companies are in very different stages in terms of the adoption of technology.

The global automotive tire market is driven by an increase in automotive production and sales across different vehicles segments and a rise in competition among tire manufacturers. In addition, introduction of advanced technology in the manufacturing process is expected to propel the growth of the automotive tire market.

From a size of $155 billion in 2018, the automotive tire market is projected to grow to $237 billion by 2024.
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The major share of the automotive tire market is cumulatively held by four major players that accounted for more than 45% of global tires sales as of 2018, with Bridgestone Corporation in second position.

The strategic techquisition of Azuga is evidence that Bridgestone understands that the industry is shifting to technology. However, unlike many of its peers who understand the vision but limit themselves to in-house efforts, Bridgestone Americas has also taken bold “inorganic” action to execute its vision.

“Bridgestone’s focus on building a more sustainable future through mobility technologies is well aligned with the mission of Azuga.”
- Ananth Rani, CEO of Azuga Holdings, Inc.

Following this techquisition, Bridgestone can look forward to accelerating Bridgestone’s progress toward delivering sustainable tire-centric and mobility solutions that improve fleet efficiency, safety, vehicle uptime and customer service.

CLEAR TRANSFORMATIONAL OPPORTUNITY

Bridgestone’s techquisition of Azuga is expected to offer the industry’s most complete integrated solution. By acquiring Azuga, Bridgestone has access to a team of more than 400 Azuga employees based in the U.S. and India who are now part of the Bridgestone Mobility Solutions team.

The strategic logic of the deal is clear: Bridgestone will use Azuga's powerful data gathering capabilities to accelerate the development of its core tire products and sustainable mobility solutions, while Bridgestone's existing line of cloud-based fleet mobility solutions will be supplemented by the Azuga fleet management platform.

The techquisition of Azuga continues Bridgestone’s evolution towards becoming a sustainable solutions company and builds upon Bridgestone’s recently announced investment in autonomous long-haul trucking company Kodiak Robotics.

THE QUOTE
“Together, our teams will continue the momentum we’ve already created, and accelerate our path toward providing the most advanced mobility solutions for our customers and society.”
- Ananth Rani, CEO of Azuga Holdings, Inc.

Bridgestone Americas’ acquisition of Azuga is an example of how a non-tech traditional incumbent is actively engaging in the journey of transforming itself to deliver greater value to its stakeholders – particularly its shareholders and customers – by properly positioning itself for the future.

The essence of such a transformation unfolding is embedded in a strategy execution approach we have trademarked and call Techquisition, which my firm, Aquaa Partners, has designed and delivers to its clients every day as an experienced and trusted expert partner.

Source(s): Aquaa Partners, Company Websites, Pitchbook, Yahoo Finance, PR News Wire, Research and Markets, Business Wire & Forbes

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