Semtech Corp., Camarillo CA, a leading global provider of high-performance analog and mixed-signal semiconductors and advanced algorithms, announced a definitive agreement to acquire Vancouver-based Sierra Wireless Inc., a global supplier of Internet of Things (IoT) solutions. 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, enabling customers to more easily find innovative end-to-end solutions for any segment. The agreement is also expected to be immediately accretive to Semtech’s non-GAAP EPS before synergies and generate US$40 million in operational synergies within 12 to 18 months of closing the transaction.
This acquisition brings together two important technologies for the future of IoT – LoRa and cellular – to enable the digitalization of the industrial world with a complete chip-to-Cloud platform. Semtech expects the combination of Sierra Wireless’ cellular capabilities through its modules, gateways, and managed connectivity with Semtech’s LoRa-enabled endpoints to create a unique and differentiated IoT portfolio that will enable a plethora of new use cases. IoT usage. Additionally, the combination of Sierra Wireless’ cloud service offerings and Semtech’s LoRa Cloud services will bring together a future cloud service portfolio offering that will include enhanced security, provisioning, device management and geolocation capabilities for applications. Power-optimized IoT. This new cloud services capability is expected to immediately generate over US$100 million in recurring high-margin IoT cloud services revenue.
Combination of cellular, LoRa and Cloud services
“We believe that the next era of technological growth is the complete digitization of our industrial world – the Internet of Everything. Our vision is to build a simple, horizontal platform with the aim of accelerating this transformation and creating a planet smarter and more sustainable,” said Semtech President and CEO Mohan Maheswaran. “This exciting strategic acquisition of Sierra Wireless is a critical component in realizing this vision through the combination of cellular, LoRa and cloud services. together with Sierra Wireless’ world-class engineering team, we will be able to advance the market with multi-radio solutions that bring new chip-to-cloud services to support customers and grow our business.
“Over the past year, Sierra Wireless has taken decisive steps to grow the business profitably, 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 evolving, optimizing and ultimately delivering an even stronger product portfolio and service model to customers,” said Phil Brace, President and CEO. from the management of Sierra Wireless. “Sierra Wireless is a high-growth company with some of the best and most advanced IoT technologies in the industry, and we are excited 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 providing exciting career opportunities for our talented employees within the combined company.
Sierra Wireless brings highly complementary skills and capabilities to Semtech, including core Sierra Wireless modules, gateways, 5G and cloud services. Given Sierra Wireless’ demonstrated expertise in IoT and cellular engineering, software and services, and deep knowledge of IoT channels and vertical markets, Semtech expects the combined company to be well positioned. to serve high-growth segments such as:
- Supply Chain, Logistics and Asset Management
- Utilities including water, gas and electricity meters
- Smart cities and buildings, including air quality monitoring and public safety
- Smart agriculture and species protection
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