High-performance analog and mixed-signal semiconductors and advanced algorithms supplier Semtech Corporation has announced that it has agreed to acquire wireless communications equipment designer, manufacturer and services provider Sierra Wireless. Under the definitive agreement, 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.
The acquisition, says the company, will significantly expand its addressable market and is expected to approximately double its 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 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.
The company says that it expects the combination of Sierra Wireless’ cellular capabilities across its modules, gateways and managed connectivity together with its own LoRa-enabled end nodes to create a uniquely differentiated IoT portfolio that 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, says the company, 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,” says 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.”
Phil Brace, president and chief executive officer of Sierra Wireless adds, “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. 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
The deal is 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, which is expected sometime in Semtech’s fiscal year 2023.