IoT Blockbuster: Semtech To Buy Sierra Wireless For $1.2 Billion
“We believe the next era of technology growth is the full digitization of our industrial world – the Internet of Everything,” said Semtech’s CEO Mohan Maheswaran.
Semtech’s $1.2 billion deal to acquire Sierra Wireless is bringing together two important technologies for the future of the Internet of Things (IoT)—Long Range Radio (LoRa) wireless and cellular—with the goal of enabling digitization with a new chip-to-cloud platform.
Semiconductor and IoT standout Semtech says it will double the company’s revenue with the acquisition of IoT specialist Sierra Wireless. With Semtech at a current run rate of approximately $741 million, the combined company is expected to generate nearly $1.5 billion in annual sales.
“We believe the next era of technology growth is the full digitization of our industrial world – the Internet of Everything,” said Semtech’s CEO Mohan Maheswaran in a statement. “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.”
Maheswaran said Sierra Wireless is a critical part of bringing this vision to life through the combination of cellular, LoRa and cloud services. Combining the two companies will advance the market with “multi-radio solutions that bring new chip-to-cloud services” to customers, he said.
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Sierra Wireless’ stock is up 14 percent Wednesday at $28.15 per share compared to Monday, when rumors first began circulating about the possible acquisition.
Semtech’s stock is currently trading at $55.34 per share, down 11 percent compared to Monday.
Semtech And Sierra Wireless Technology Roadmap
Camarillo, Calif.-based Semtech is a global supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms for infrastructure, high-end consumer and industrial equipment.
With more than 25 years of cellular IoT experience, Vancouver, B.C.-based Sierra Wireless specializes in networking and IoT solutions that combine devices, network services and software. Sierra works with customers to develop industry-specific solutions for their IoT deployments—from integrated solutions to connect edge devices to the cloud, to a platform to extract real-time data to improve business decisions.
Semtech will leverage Sierra’s 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 new IoT use cases, according to the companies.
The combination of Sierra Wireless’ Cloud services offerings and Semtech’s LoRa Cloud services will also bring together a cloud portfolio offering that will include enhanced security, provisioning, device management, and geolocation capabilities for power optimized IoT applications.
$100 Million Of High-Margin IoT Cloud Services
Semtech said this new cloud services capability is expected to immediately add more than $100 million of high-margin IoT cloud services recurring revenues to the company.
Phil Brace, president and CEO of Sierra Wireless, said the combined company will be able to extend the reach of IoT solutions by scaling, optimizing and delivering a stronger product portfolio and service model to its customers.
“Sierra Wireless is a high growth business with some of the best, most advanced IoT technology in the industry,” said Brace in a statement. “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.”
The Deal
Semtech says it will close its $1.2 billion acquisition of Sierra Wireless during its current fiscal year 2023.
Under the terms of the agreement, Sierra Wireless shareholders will receive $31 per common share. This represents a premium of approximately 25 percent to the closing price of Sierra Wireless’ common stock on July 29, 2022.
The merger will generate $40 million of run-rate operational synergies within 12- to 18 months of the closure, Semtech said.