Quindell buys out RAC from CCS telematics joint venture
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Quindell has bought out joint venture partner RAC's 49% share of car insurance 'black box' business Connected Car Solutions (CCS) for £3.5m.
The company said it would reduce capital expenditure on the project by no longer providing a free roll-out of the telematics technology to RAC customers, as planned previously.
Quindell's management predicted the project would have a lower turnover but extra cash flow of roughly £10m in 2014 and £20m in 2015.
Buying out RAC's shares will cost Quindell a gross £18.5m but this is offset by £15m in cash payments by the RAC.
RAC chief executive Chris Woodhouse said the two companies would "continue to work closely in the connected car space" as well as their existing claims outsourcing and technology arrangements.
Quindell will continue to process 100% of claims arising from the RAC's telematics for breakdown members and the company said the revised terms of the deal now allowed it to offer "a single connected car strategy across all global markets".
As part of the new terms, Quindell retains over 600,000 connections, including circa 200,000 phone-based apps, of which around half are in the territory covered by CCS, and leaving the company "well ahead" of making its target of 12m paying subscriber connections by 2019/20.
Outside of the CCS business Quindell's telematics proposition has been adding 10,000-15,000 new subscribers per month primarily from the US, according to house broker Canaccord, and the company reiterated that it anticipated this run-rate would reach 20,000 subscribers per month in 2015.
Analyst Arun George said he believed the uncertainty on the status of the joint venture has weighed heavily on the shares and that the announcement "provides a quick resolution as well as brings more consistency to Quindell's global telematics strategy".
Shares in Quindell were up 3.2% to 174.34p at 08:43 on Tuesday.
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