Quindell, a global provider of professional services and digital solutions, has bought the RAC’s stake in their joint telematics venture, Connected Car Solutions (CCS).
The two launched CCS to distribute Quindell and RAC’s combined connected car capabilities in April.
However, due to what it says were “market conditions beyond the control of either Quindell or RAC”, they have now decided that it is not the best use of capital for either party to finance a free telematics roll out to consumers as initially planned.
A statement from Quindell said: “It is now in the best interests of both parties to restructure CCS and for Quindell to acquire RAC’s interest in CCS and continue their strong working relationship both in respect of existing contracts and in the future.
The net cost of the restructuring to Quindell is £3.5 million (payable in cash over 18 months), gross £18.5 million offset by RAC cash payments of £15 million from RAC in consideration of revised contract terms.
They include, Quindell retaining more than 600,000 connections, including around 200,000 phone-based apps of which approximately 50% are in the territory covered by CCS.
And, the RAC buying back its brand licence, customers and sales pipeline in relation to telematics, which equates to around 7,500 connections, plus sales pipeline primarily in fleet.
Rob Terry, chairman of Quindell, said: “The relationship between RAC and Quindell remains strong and we will continue to work closely together in key areas, including in relation to the servicing of claims arising from RAC’s connected car offering and potentially through the Ingenie brand. These revised terms are in the best interests of both companies.
“Quindell has a number of exciting new contracts in the telematics and connected car space and is confident of achieving its targets in this area.
“The Board continues to have confidence in its previous guidance in respect of cash and profitability for 2014 and beyond.”
Chris Woodhouse, chief executive officer of RAC, said: “We continue to have a strong relationship with Quindell as a key partner and intend to continue to work closely in the connected car space as well as through our on-going claims outsourcing and technology arrangements, which have been of significant benefit to both parties to date.
“RAC has been looking after its members and their needs for more than 115 years and our on-going association with Quindell will enable us to continue improving their customer journey, whilst delivering market leading propositions into the future.
“Quindell's technology and integrated outsourcing helps deliver to our members and commercial partners a best of breed solution that will enhance their driving experience."