Hughes Telematics joins Polaris Acquisition Corp. in $700 million stock deal

Hughes Telematics, Inc., and Polaris Acquisition Corp. have signed a definitive merger agreement in an all-stock transaction valued at approximately $700 million.

The transaction provides Hughes Telematics with access to added resources, including an additional $140 million in capital to fund the company’s growth opportunities. This capital is in addition to the approximately $90 million invested to date by an affiliate of Apollo Management L.P. (“Apollo”).

Apollo, which will maintain its current stake in Hughes Telematics, has agreed, along with management and other Hughes Telematics shareholders, to a two-year lockup.

In addition, the founders of Polaris have a one-year lockup. Hughes Telematics also has long-term contracts with the Chrysler Group and Mercedes-Benz USA, both of which are expected to begin implementing the Hughes Telematics solution in the second half of 2009 with the solution expected to be standard in nearly all of their U.S. production by 2012.

Hughes Telematics estimates automotive telematics to reach $30 billion in annual revenue within a decade. Automakers are contracting with Hughes Telematics to create user-friendly computerized dashboard displays and implement advanced, contextual voice recognition systems, through which drivers will be able to control personal devices such as MP3 players, download content, read, receive and respond via voice to e-mail, navigate in real time to connect with valuable points of interest, and much more.

The transaction provides for a direct merger of Hughes Telematics and Polaris. Under the terms of the agreement, the shareholders of Hughes Telematics will receive approximately 45 million shares of Polaris common stock at the closing of the transaction, subject to certain adjustments, and they will be eligible to receive up to 29 million additional shares of Polaris common stock upon the achievement of certain stock price targets in the subsequent five years based on approximately 25 percent compounded annual growth in the Polaris stock price.

Hughes shareholders are expected to initially own approximately 65 percent of the fully diluted equity of the combined company, and the Hughes Telematics management team, with significant experience in telematics, satellite radio, wireless, automotive and entrepreneurial initiatives, will continue to manage the company.

Stockholders of Hughes Telematics will further align their interests with the public stockholders of Polaris by agreeing not to transfer their shares of Polaris for two years. The transaction is expected to be completed during the first quarter 2009 pending Polaris stockholder approval, regulatory approval, and other customary closing conditions.

Lazard is serving as financial advisor to Polaris, and Pali Capital is serving as financial advisor to Hughes Telematics.

For more information on the transaction, visit www.HTIPolaris.com, www.polarisacq.com or www.hughestelematics.com.