Quarterhill’s acquisition of Conduent’s business redraws the North American tolling supply map

The announced $70 million deal will create a clear number 2 in the North American tolling market – and ends years of strategic uncertainty around one of the industry’s largest back office providers.

What happened

Quarterhill (TSX: QTRH), the Canadian intelligent transportation systems (ITS) provider, has entered into a definitive agreement to acquire substantially all of the assets of Conduent’s tolling solutions business. Under the terms of the deal, Quarterhill will pay $70 million in cash, but Conduent will also receive common shares representing 7% of Quarterhill’s stock at closing, alongside registration and board observer rights. At Quarterhill’s current share price (around CAD 2.40, following a c. 40% jump on the announcement) the equity component is worth approximately $16 million, implying a total consideration of roughly $86 million.

The transaction, expected to close in Q4 2026 subject to regulatory approvals, is projected to approximately triple Quarterhill’s tolling revenue and create a combined platform with a contracted backlog of roughly $2 billion. On a pro forma basis, the merged business would generate more than $400 million in annual revenue with an adjusted EBITDA margin of 10–15%.

Why this deal matters: the market context

Our latest Tolling Solutions Market Study estimated the North American market at $1.69 billion – a large and mature market, and one significantly more concentrated than Europe. TransCore leads with more than a third of regional tolling solution revenues, followed by Conduent at around 12%, which means that the top two vendors jointly controlled roughly 48% of the market. Quarterhill sat in the second tier, holding an estimated 7% share alongside ViaPlus, behind Kapsch.

The impact of this acquisition is therefore striking. Combining Conduent’s tolling position with Quarterhill’s creates an entity commanding an estimated 19% of North American tolling revenues — vaulting Quarterhill from a mid-scale, second-tier vendor into a clear number 2, and materially narrowing the gap to TransCore.

The scale being acquired is substantial. Conduent’s systems process around 14 million tolling transactions per day, and the company manages a large share of US electronic tolling back-office operations, with flagship contracts including E-ZPass New York, the  Bay Area Toll Authority, and VDOT’s I-64 Hampton Roads Express Lanes, as well as the Dart Charge free flow scheme in the UK. We estimate Conduent’s tolling business unit revenue at $241 million — dwarfing Quarterhill’s revenue of around $153 million.

An outcome our research anticipated

For readers of our study, this transaction will not come as a surprise. We flagged prolonged strategic uncertainty over Conduent’s Transportation unit as one of the supplier’s key challenges: a potential spin-off or divestiture was announced back in April 2022 but never completed, leaving customers and competitors guessing for four years. Combined with delivery setbacks and the loss of high-profile re-competes — most notably the New Jersey Turnpike Authority’s E-ZPass contract to TransCore, awarded on technical merit despite Conduent’s lower price — the tolling business had become an obvious divestiture candidate as Conduent restructures around its core business process services.

Equally, the deal is consistent with the strategy we identified at Quarterhill: M&A as the core growth engine. Having assembled a full-stack ITS offering through the acquisitions of IRD (2017), ETC, Sensor Line and VDS (2021), and Red Fox (2024), Quarterhill has repeatedly used acquisitions to add capability and scale. This transaction is the boldest expression of that playbook yet.

What to watch

Scale alone does not guarantee success in tolling, and the integration challenge is considerable:

• Execution discipline. Our analysis noted that Quarterhill is still working through legacy contract issues and margin pressure, while Conduent’s brand has been affected by delivery problems on programmes such as Florida’s SunPass. Merging two organisations with recent operational scars will test management;
• Customer retention through re-competes. North American agencies have shown  they will switch suppliers on best-value grounds. The combined entity’s ~$2 billion backlog provides visibility, but upcoming renewals will be the truemeasure of the merger;

• Competitive response. TransCore retains market leadership, and players such as Kapsch, ViaPlus and Neology will be watching for opportunities created by integration distraction.

However, if executed well, this acquisition will transform the competitive structure of the world’s second-largest tolling market — turning a fragmented second tier into a genuine two-horse race.

For a full analysis of the 26 leading tolling solution providers across Europe and North America — including market shares, tender scoring analysis and detailed supplier profiles of both Quarterhill and Conduent — see the latest PTOLEMUS Tolling Solutions Market Study.

Sources: Quarterhill press release (30th June 2026); PTOLEMUS Tolling Solutions Market Study; Traffic Technology Today.

Contact Alex Tallon at [email protected] or connect on LinkedIn, and explore the full study here.

Article written by Alex Tallon, under PTOLEMUS copyright