Why Powerfleet of AI Actions Triumphed Today

One of the more specialized artificial intelligence (AI) stocks on the market had a memorable Wednesday. At news that it was multiplying with an acquisition, investors flocked Powerfleet (AIOT 7.30%)sending its share price over 7% higher. It was remarkable when compared to his performance S&P 500 index; fell 0.3% during the Hump Day trading session.

It’s time to multiply

Powerfleet, whose commercial stock develops AI of Things (AIoT) solutions for the transportation industry, announced the deal shortly before the market opened. The company has signed a definitive agreement to acquire the private company Fleet Complete. The buyer said the total transaction value of the acquisition is $200 million.

Powerfleet said it will finance the transaction primarily with a $125 million senior secured loan facility, accompanied by funds from a planned $70 million secondary issue of common stock. Additionally, $15 million is expected to come from a private placement of common stock to an existing shareholder.

In the press release trumpeting the acquisition, Powerfleet CEO Steve Towe said the ownership of Fleet Complete “is expected to significantly improve our revenue quality and strengthen our EBITDA by increasing our size and operational presence in North America and Europe.”

Towe added that “It will also significantly expand our market reach through established channel partnerships with some of the world’s largest telecommunications providers.”

Obvious synergies

This certainly feels like a significant acquisition for Powerfleet, and if all goes reasonably well, they should be able to seamlessly integrate the new asset into their own business. In this era of relatively low-cost financing and frothy equity markets, the combination of the loan facility and the equity issue will not put too much of a burden on the company’s fundamentals. No wonder investors cheered the news.