Sierra Wireless agrees deal to buy indebted Numerex for $107m, shares drop 20% then rebound

Jason Cohenour of Sierra Wireless

Canada-based Sierra Wireless, Inc., a provider of integrated device-to-cloud solutions for the Internet of Things (IoT), has agreed to buy Numerex Corp. for US$107 million, reports Jeremy Cowan. Described as a “definitive merger agreement”, the deal has been approved unanimously by both boards of directors. Sierra Wireless will acquire Numerex in a stock-for-stock transaction valued at approximately US$107 million.

The valuation is based on Sierra Wireless’ closing stock price on August 1, 2017 of US$29.65 per share and represents a premium of 17.5% to Numerex’s 20-day average share price. Sierra Wireless had earlier reported strong 2nd Quarter (Q2) results showing a rise in revenues of 11% year-on-year. Sierra Wireless will repay Numerex’s debt of $20 million in cash.

Markets, however reacted badly for Sierra Wireless, with Scotiabank downgrading the stock to Underperform from Perform. Shares closed 20.3% lower in Toronto on Thursday at CA$29.33, down from $37.5 on July 26. Meanwhile, Numerex stocks closed 17.9% higher on the news. (Update by Jeremy Cowan, August 5, 2017: Sierra Wireless shares have recovered some of the lost ground, closing on Friday, August 4, 2017 at CA$31.86.)

The acquisition is designed to expand Sierra Wireless’ position as a global IoT pure-play and will, says the company, significantly increase its subscription-based recurring services revenue. On completion of the transaction Numerex will become a subsidiary of Sierra Wireless and Numerex shareholders will own approximately 10% of the common shares of Sierra Wireless on a fully diluted basis.

The Transaction is expected to close in January 2018 subject to the receipt of Numerex shareholder approval and certain regulatory and government approvals, and satisfaction of other customary closing conditions.

“The acquisition of Numerex accelerates our IoT device-to-cloud strategy by adding an established customer base, significant sales capacity, proven solutions and recurring revenue scale,” said Jason Cohenour, president and CEO of Sierra Wireless. “The combination of Sierra Wireless and Numerex will represent a powerful business and technology platform that will enable the company to drive a global leadership position in IoT services and solutions.”

“We believe that combining with Sierra Wireless will strengthen Numerex’s business, advance our product offerings, and accelerate the growth of our recurring revenue streams,” said Ken Gayron, Interim CEO and CFO of Numerex. “The transaction also provides our shareholders the opportunity to participate in the considerable upside potential of the combined company.”

Ken Gayron

According to Sierra Wireless, among the benefits of the transaction are:

    • The acquisition of Numerex accelerates Sierra Wireless’ IoT device-to-cloud strategy
    • Scales Sierra Wireless’ subscription-based recurring revenue from IoT services
    • Significantly bolsters Sierra Wireless’ position in the global IoT market;
    • Expands Sierra Wireless’ sales capacity with an experienced team and channel;
    • Strong fit with Sierra Wireless organisation and operating model goals; and
    • Strategically diversifies Sierra Wireless’ services business and revenue mix.

Sierra Wireless expects that recurring revenue from its services business will increase from approximately 4% of annualised revenue today to more than 10% of annualised revenue upon completion of the Transaction.

It also expects this acquisition to be accretive to non-GAAP earnings per common share approximately 12 months after the close of the Transaction, assuming run-rate synergies and excluding one-time charges.

Comment on this article below or via Twitter: @IoTNow OR @jcIoTnow

FEATURED IoT STORIES

9 IoT applications that will change everything

Posted on: September 1, 2021

Whether you are a future-minded CEO, tech-driven CEO or IT leader, you’ve come across the term IoT before. It’s often used alongside superlatives regarding how it will revolutionize the way you work, play, and live. But is it just another buzzword, or is it the as-promised technological holy grail? The truth is that Internet of

Read more

Which IoT Platform 2021? IoT Now Enterprise Buyers’ Guide

Posted on: August 30, 2021

There are several different parts in a complete IoT solution, all of which must work together to get the result needed, write IoT Now Enterprise Buyers’ Guide – Which IoT Platform 2021? authors Robin Duke-Woolley, the CEO and Bill Ingle, a senior analyst, at Beecham Research. Figure 1 shows these parts and, although not all

Read more

CAT-M1 vs NB-IoT – examining the real differences

Posted on: June 21, 2021

As industry players look to provide the next generation of IoT connectivity, two different standards have emerged under release 13 of 3GPP – CAT-M1 and NB-IoT.

Read more

IoT and home automation: What does the future hold?

Posted on: June 10, 2020

Once a dream, iot home automation is slowly but steadily becoming a part of daily lives around the world. In fact, it is believed that the global market for smart home automation will reach $40 billion by 2020.

Read more
RECENT ARTICLES

AND Technology Research and University of Essex join forces to develop self-powering, battery-less IoT device powered by AI

Posted on: September 24, 2021

Purpose-led technology company, AND Technology Research, is announcing a new partnership with computer scientists from the University of Essex to explore new ways of reducing the amount of power a device needs, while at the same time using energy harvesting techniques to produce truly self-powering devices.

Read more

How can IoT optimise the bearing supply chain?

Posted on: September 24, 2021

In 2020, stock management issues were estimated to cost UK manufacturers 66 billion GBP  because of disruption caused by the pandemic. Consequently, the quest to improve efficiency, cut waste and enhance supply chain operations is one that suppliers know all too well. Here Chris Johnson, managing director at miniature bearings specialist SMB Bearings, explains how the Internet of Things

Read more