CAMARILLO, Calif., & VANCOUVER, British Columbia–(BUSINESS WIRE)–Semtech Corporation (Nasdaq: SMTC), a leading global supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms, and Sierra Wireless, Inc. (Nasdaq: SWIR) (TSX: SW), a world-renowned Internet of Things (IoT) solutions provider, yesterday announced a definitive agreement under which Semtech will acquire all outstanding shares of Sierra Wireless for US$31 per share in an all-cash transaction representing a total enterprise value of approximately US$1.2 billion, subject to customary closing conditions. The acquisition will significantly expand Semtech’s addressable market and is expected to approximately double Semtech’s annual revenue and create a strong and diverse portfolio of connectivity solutions for the growing IoT market, making it easier for customers to find innovative end to end solutions for any segment. The deal is also expected to be immediately accretive to Semtech’s non-GAAP EPS before synergies and generate US$40 million of run-rate operational synergies within 12-18 months post-transaction close.
This acquisition brings together two important technologies for the future of IoT – LoRa and cellular – to enable the digitization of the industrial world with a comprehensive chip-to-Cloud platform. Semtech expects the combination of Sierra Wireless’ cellular capabilities across its modules, gateways and managed connectivity together with Semtech’s LoRa-enabled end nodes to create a uniquely differentiated IoT portfolio which will enable a plethora of new IoT use cases to be conceived. In addition, the combination of Sierra Wireless’ Cloud services offerings and Semtech’s LoRa Cloud™ services will bring together a future Cloud services portfolio offering that will include enhanced security, provisioning, device management, and geolocation capabilities for power optimized IoT applications. This new Cloud services capability is expected to add greater than US$100 million of high-margin IoT Cloud services recurring revenues immediately.
“We believe the next era of technology growth is the full digitization of our industrial world – the Internet of Everything. Our vision is to build a simple, horizontal platform with the goal of accelerating this transformation and to bring about a smarter and more sustainable planet,” said Semtech president and chief executive officer, Mohan Maheswaran. “This exciting strategic acquisition of Sierra Wireless is a critical part of bringing this vision to life through the combination of cellular, LoRa and Cloud services. Together, with the world-class Sierra Wireless engineering team, we will be positioned to advance the market with multi-radio solutions that bring new chip-to-Cloud services to support customers and grow our business.”
“Over the last year, Sierra Wireless has taken decisive steps to profitably grow the business, and I am proud that the progress we have made has culminated in this exciting transaction. Together with Semtech, we will be able to extend the reach of IoT solutions by scaling, optimizing and ultimately delivering an even stronger product portfolio and service model to customers,” said Phil Brace, president and chief executive officer of Sierra Wireless. “Sierra Wireless is a high growth business with some of the best, most advanced IoT technology in the industry, and we are pleased to deliver immediate and compelling value to our shareholders through this transaction. Joining Semtech will also allow us to bring cellular and LoRa technology together to create innovative solutions that exceed the expectations of our customers around the world while delivering exciting career opportunities to our talented employees as part of the combined company.”
Sierra Wireless brings highly complementary skills and capabilities to Semtech, including Sierra Wireless’ leading modules, gateways, 5G, and Cloud services. Given Sierra Wireless’ demonstrated expertise in IoT and cellular engineering, software and services, and its extensive knowledge of IoT channels and vertical markets, Semtech expects the combined company will be well positioned to serve high growth segments such as:
- Supply chain, logistics and asset management
- Utilities, including water, gas and electric metering
- Smart cities and building, including air quality monitoring and public safety
- Smart agriculture and species protection
Transaction Details
Under the terms of the agreement, Sierra Wireless shareholders will receive US$31 per common share. This represents a premium of approximately 25% to the closing price of Sierra Wireless’ common stock on July 29, 2022, the last trading day prior to media speculation regarding a potential transaction, and a premium of approximately 30% to Sierra Wireless’ unaffected 30-day volume weighted average price. Semtech intends to fund the transaction with cash on hand and committed debt financing arranged by J.P. Morgan.
This transaction has been approved by the Semtech and Sierra Wireless Boards of Directors. This transaction is subject to approval by Sierra Wireless shareholders, certain regulatory bodies and the Supreme Court of British Columbia, and other customary closing conditions. This transaction is expected to close in Semtech’s fiscal year 2023. Until close, the parties remain separate independent companies.
Sierra Wireless Preliminary Financial Results
In a separate press release issued yesterday, Sierra Wireless announced preliminary details relating to certain of its financial results for its second quarter of 2022. Sierra Wireless will issue a press release to share its full second quarter financial results after the market closes Aug. 11, 2022. The Sierra Wireless preliminary results press release is available on its website.
In light of the pending transaction, Sierra Wireless is canceling its second quarter financial results conference call previously scheduled for Aug. 11, 2022.
Semtech Conference Call
Semtech hosted a conference call for the financial community yesterday to discuss the acquisition. A replay of the webcast is available on the events calendar on Semtech’s investor website.
Advisers
J.P. Morgan Securities LLC is serving as the exclusive financial adviser to Semtech. O’Melveny & Myers LLP is serving as its U.S. legal counsel and Stikeman Elliott LLP is its Canadian legal counsel.
Qatalyst Partners and BMO Capital Markets are serving as financial advisers to Sierra Wireless. Skadden, Arps, Slate, Meagher & Flom LLP is serving as its U.S. legal counsel and Blake, Cassels & Graydon LLP is its Canadian legal counsel.