Verizon Communications said on Monday it would buy GPS vehicle tracking firm Fleetmatics Group Plc for about $2.4 billion in cash to bolster its expansion into the connected vehicle and fleet management market.

Verizon, the No. 1 U.S wireless company, will pay $60 per share, a premium of about 40 percent to Fleetmatics' closing price on Friday. The deal is expected to close in the fourth quarter of 2016.

Shares in Fleetmatics soared 39 percent to $59.60 while Verizon dipped 0.7 percent to $55.01.

Fleetmatics, with North American headquarters in Waltham, Massachusetts, develops software that shows fleet operators vehicle location, fuel usage, speed, mileage and other information on their mobile workforce, including a driver's behavioral data.

As the market for smartphones and mobile devices gets saturated, Verizon and its biggest rival, AT&T Inc, are hoping that connecting more objects to their networks will provide new revenue.

The acquisition helps Verizon capture market share in the "highly fragmented and pretty under-penetrated" fleet and mobile workforce management business, Andrés Irlando, chief executive officer of Verizon Telematics, said in an interview. The unit connects vehicles to its wireless network and offers applications to track and manage them.

On Friday, Verizon Telematics closed another deal, to buy California-based Telogis, which builds software to track commercial vehicles and navigation software used by automakers such as Ford Motor Co. Terms were not disclosed.

Verizon Telematics also offers its own fleet management service, called "Networkfleet."

"Both Telogis in the enterprise space and Fleetmatics in the (small- and medium-sized businesses) space have what's widely considered best-in-class technology software platforms, as well as products and services," Irlando said.

Fleetmatics' international presence in regions such as Western Europe and Australia helps Verizon expand the global reach of its telematics business, Irlando added.

In May, Fleetmatics posted revenue of $78.9 million for the first quarter, up 21 percent from a year earlier.

Verizon does not break out its telematics unit revenues - it is reported under sales from its larger "Internet of Things" business. Aimed at connecting to the internet everything from household devices to industrial machines, the business posted revenue of $205 million in the second quarter ended June 30, 2016, up 25 percent from a year ago, Verizon said last week.

Verizon, which has been seeking to add new revenue streams, said last week it would buy Yahoo Inc's core internet assets for $4.8 billion to make a push into the digital media and ad business. – Reuters