Sirius Buys Vehicle Services Business to Expand in Cars

By Liana B. Baker | August 19, 2013

Sirius XM Radio Inc, the satellite radio provider, on Thursday agreed to buy the vehicle services business unit of Agero for $530 million in cash, as Sirius aims to offer services to drivers beyond audio entertainment.

Agero’s connected vehicle unit provides safety and navigation information, as well as other technology services.

The deal, which is expected to close in the fourth quarter, is part of larger push by Sirius XM led by Chief Executive Jim Meyer to branch out beyond music to areas like automotive safety, vehicle tracking and other connected services in cars.

It is Sirius XM’s first large-scale acquisition.

“The acquisition will help secure Sirius’ dominance in the car,” Macquarie analyst Amy Yong said, because it will drive higher revenue per subscriber, lower churn and strengthens the company’s relationship with subscribers.

“The company has not been shy about its desire to enter into telematics, a $4.2 billion market opportunity,” Yong said.

Sirius XM’s satellite radios are now in 70 percent of new U.S. vehicles, providing access to exclusive content such as shock-jock Howard Stern, live sportscasts and music channels with few commercials. [ID: L2N0DH12L]

With the Agero deal, Sirius XM said it will provide services to several automotive manufacturers, including Bayerische Motoren Werke AG , Honda Motor Co Ltd, Nissan Motor Co Ltd and Toyota Motor Corp.

Based in Medford, Massachusetts, Agero serves more than 75 million car owners in partnerships with auto manufacturers, insurance carriers and others.

Agero Chief Executive Dave Ferrick said in a statement that the deal will allow the company to focus on traditional roadside vehicle assistance.

Morgan Stanley served as an adviser to Sirius XM on the deal.

Liberty Media, the holding company controlled by cable pioneer John Malone, became Sirius XM’s controlling shareholder at the beginning of the year.

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