Quarterhill, parent company of International Road Dynamics (IRD), has bought German ITS firm Sensor Line for €3.8m (Can$6m).
Sensor Line, which was launched in 1996, makes fibre optic traffic sensors for road and rail.
It will be "integrated" into IRD's operation but the Canadian company says it will maintain manufacturing operations at Sensor Line's facility near Munich.
In a statement, Rish Malhotra, IRD CEO, said: “This acquisition broadens our product suite and expands our geographic footprint further into the European market."
Sensor Line has installed more than 50,000 systems in 50 countries worldwide, the company says.
The firm's in-road sensors "will further strengthen our enforcement and tolling services, and our distribution capabilities will open up new opportunities to grow their business", Malhotra continued.
Paul Hill, CEO of Quarterhill, said that Sensor Line was expected to contribute up to Can$5m this year in revenue and indicated that there would be more acquisitions.
"We believe we are just getting started in terms of expanding our ITS business to capitalise on the attractive and growing demand for tech-enabled infrastructure," he concluded.