Semtech to acquire Sierra Wireless in IoT push
Semtech Corporation and Sierra Wireless have 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 products for the growing IoT market.
This acquisition brings together two important technologies for the future of IoT, namely 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 cloud services from Sierra Wireless 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 products that bring new chip-to-cloud services to support customers and grow our business.”
“Together with Semtech, we will be able to extend the reach of IoT 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.”
Sierra Wireless brings highly complementary skills and capabilities to Semtech, including its 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.
This transaction is expected to close in Semtech’s fiscal year 2023. Until close, the parties remain separate independent companies. The acquisition 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-close