In a surprise move that seems to confirm predictions of consolidation in the telematics market, DigiCore has taken a minority stake in the UK operations of Minorplanet, which is known to have been experiencing difficulties in the current depressed economy.

The deal sees DigiCore injecting £3 million into the Minorplanet operation, for which it gets a 25 per cent share in a new business set up by Minorplanet's owners. This company will own all Minorplanet's UK assets, including its customer base.

In the initial announcement, the two companies said the deal would provide immediate financial stability for Minorplanet, admitting that the company had been contending with 'significant financial problems that have severely limited its ability to sell and raise lease finance'.

It was not clear when m.logistics closed for press exactly how the new Minorplanet operation would be structured, or whether some form of closer merger between the two groups was on the cards. Since DigiCore has taken only a minority stake, it appears that Minorplanet will continue as a separate entity with its existing branding, at least for the foreseeable future.

 

The announcement nevertheless hints at a closer relationship between the two, stating that the new company 'will combine the strengths of Minorplanet in the UK SME market, along with its customer service and software competence, with DigiCore's commercial presence and established position in the corporate market.'

This aspiration reflects that fact that Minorplanet has historically grown by gaining a large number of relatively small customers, while DigiCore has focused more on large corporate customers, especially among public utility companies and local authorities (as an example, see Royal Mail news story on opposite page). In this sense the two organisations make a good fit.

According to Nick Vlok, chief executive of DigiCore Holdings: 'We hope this is the start of a relationship that we can develop further for our mutual commercial benefit by taking advantage of growing demand for tracking solutions in the UK and mainland Europe.'

Terry Donovan, Minorplanet's chief executive, added: 'We believe [DigiCore's] commitment to the new subsidiary offers an opportunity to maximise our business within the UK and across mainland Europe.'

Minorplanet is one of Britain's longest-established vehicle tracking companies, dating back to the 1990s. It has not been without critics, who were especially vociferous back in the "hard sell" era of early telematics systems, when it was under different management; but its sheer longevity makes it a remarkable survivor.

DigiCore's UK business, which has always traded strongly on its C-track brand, was founded by Tom O'Connor, who is still in charge, and was later acquired by its current parent, a South African listed company. The parent company too develops its own technology, and has a strong worldwide presence.