Sierra Wireless to Buy Numerex, Reports Quarterly Financials
Thursday, August 03, 2017 | Comments

Sierra Wireless entered into a definitive merger agreement to acquire Numerex in a stock-for-stock merger transaction. The transaction is valued at about US$107 million based on Sierra Wireless’ closing stock price Aug. 1 of US$29.65 per share and represents a premium of 17.5 percent to Numerex’s 20-day average share price.

The acquisition expands Sierra Wireless’ position as a global internet of things (IoT) pure play and will significantly increase its subscription-based recurring services revenue, a statement said.

Under the terms, Numerex shareholders will receive a fixed exchange ratio of 0.18 common shares of Sierra Wireless for each share of Numerex common stock. Upon completion of the transaction, Numerex will become a subsidiary of Sierra Wireless and Numerex shareholders will own about 10 percent of the common shares of Sierra Wireless on a fully diluted basis. Concurrent with closing, Numerex’s debt of about $20 million including fees shall be repaid with Sierra Wireless cash.

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.”

Sierra Wireless expects that recurring revenue from its services business will increase from approximately 4 percent of annualized revenue to more than 10 percent of annualized revenue upon completion of the transaction.

The board of directors of Sierra Wireless unanimously approved the transaction. The Numerex board of directors also unanimously approved the transaction and recommended that Numerex shareholders vote in favor of the transaction. Numerex shareholders owning about 27 percent of Numerex’s outstanding stock entered into voting agreements under which they have agreed to vote in favor of the transaction.

Sierra also reported results for its second quarter ending June 30.

“In the second quarter of 2017, we delivered strong revenue and profitability growth on a year-over-year and sequential basis,” said Cohenour. “We continued to strengthen our position as a leader in device-to-cloud solutions for the IoT with new product offerings and the acquisition of FlowThings, an innovative provider of platform services for data orchestration and rapid application development.”

Revenue for the second quarter of 2017 was $173.5 million, an increase of 11.1 percent compared with $156.2 million in the second quarter of 2016. Revenue from OEM solutions was $144.5 million in the second quarter of 2017, up 9 percent compared with $132.6 million in the second quarter of 2016. Revenue from enterprise solutions was $21.7 million in the second quarter of 2017, up 30.7 percent compared with $16.6 million in the second quarter of 2016. Revenue from cloud and connectivity services was $7.3 million in the second quarter of 2017, up 4.3 percent compared with $7 million in the second quarter of 2016.

Net earnings were $6.6 million in the second quarter of 2017 compared with net earnings of $700,000 in the second quarter of 2016. For the third quarter of 2017, the company expects revenue to be in the range of $167 million to $175 million.

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