Rekor Systems Inc.plans to acquire Florida's Southern Traffic Services for up to $14.5 million, expanding its traffic analysis technology to the South.
The acquisition would more than double Columbia-based Rekor’s (NASDAQ: REKR) coverage area by providing the company access to STS's network of traffic data collection sites. STS's existing sites gather information from 60,000 lanes of traffic, covering hundreds of thousands of square miles across the United States, complementing Rekor's existing coverage area of 21,000 lanes, Rekor CEO Robert Berman said. The acquisition is expected to close within the next 90 days.
"They're covering three times the amount of roadways that we are," Berman, referring to STS, said. "We've only been doing this for a couple years, they've been doing this since the mid-80's."
The prospective $14.5 million price tag consists of cash, stock and earnouts based on the future performance of the company. STS, a private company, will become a subsidiary of Rekor, Berman said, with founders Mark and Sheila Knowles, remaining in high-level positions.
STS, based in Gulf Breeze, Florida, primarily serves the public sector, providing traffic data to clients like the Florida Department of Transportation.
“Roadway technology across the U.S. is notoriously outdated and inefficient, making it more difficult for government agencies to manage today’s complex infrastructure environment,” Mark Knowles, STS co-founder, said in a statement. “Departments of transportation are seeing the benefits of next generation AI-enabled insights and analysis. Joining Rekor will allow us to give the power of AI to our existing and potential customers as they look to better serve their communities through better, faster, and more efficient traffic data collection and analysis.”
Rekor plans to refurbish STS’s existing sites with new technology, such as video cameras combined with artificial intelligence.
"It's Rekor giving STS the resources to grow," Berman said. "They, as a private company, were constrained for capital."
Rekor currently serves over 2,000 customers in over 80 countries. The company primarily works with a variety of customers interested in public safety and traffic management, from transportation and police departments to private companies analyzing the traffic in an out of a shopping center. Some customers use technologies that are part of the Rekor One platform, the company's main product that provides real-time data on roadway conditions, for other purposes. For example, Mastercard uses Rekor’s vehicle recognition technology to change how drive-through restaurants operate, Berman said.
Last year, Rekor purchased Israeli tech firm Way Care Technologies, a company focused on traffic management, for $61 million. Rekor currently has 230 employees, not including the around 100 employees the company would add if the acquisition of STS is successful.
"STS is a really well-run company, and they have good people," Berman said. "They've grown successfully over decades."
