Semtech buys B.C.’s Sierra Wireless for US$1.2B in all-cash deal

Billion-dollar acquisition expected to close sometime next year

Sierra Wireless CEO Phil Brace: "I am proud that the progress we have made has culminated in this exciting transaction." | Submitted

Sierra Wireless Inc. (TSX:SW; Nasdaq:SWIR) will soon have a new parent company in a deal that values the B.C. tech firm at more than US$1 billion.

California-based Semtech Corp. (Nasdaq:SMTC) has agreed to acquire the Richmond company at $31 a share as part of an all-cash deal that came to light earlier this week.

The selling price of those shares — a premium on the US$24.66 Sierra Wireless was trading at on the Nasdaq early Monday — pegs its value at US$1.2 billion.

Sierra Wireless is best known for its wireless communications design and manufacturing expertise in the Internet of Things (IoT) market. It is one of B.C.’s largest homegrown tech employers, with more than 400 workers based in the province.

Semtech said in a release the deal would double its own revenue.

“Over the last year, Sierra Wireless has taken decisive steps to profitably grow the business and I am proud that the progress we have made has culminated in this exciting transaction,” Sierra Wireless CEO Phil Brace said in a statement Tuesday.

“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.”

Sierra Wireless released preliminary second-quarter financial results the same day the acquisition deal was announced, revealing revenue to be between US$187 million and US$189 million, and adjusted EBITA coming in between US$21 million and US$23 million.

Its full financial results for Q2 will be released after the close of markets on Aug. 11.

The acquisition comes almost exactly one year after California-based Brace was recruited to take over the top job at Sierra Wireless.

Semtech is a supplier of semiconductors. The low supply of these computer chips has caused significant supply chain disruptions across the globe, affecting everything from the availability of new vehicles to consumer electronics such as gaming consoles.

Semtech said the deal would allow it to make a bigger push into the IoT market, using Sierra Wireless’ tech to help it develop a 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 [long range]-enabled end nodes to create a uniquely differentiated IoT portfolio which will enable a plethora of new IoT use cases to be conceived,” the company said in Tuesday’s release.

The deal has already been approved by the boards of both Sierra Wireless and Semtech, and is expected to close sometime in Semtech’s fiscal 2023.

It still requires regulatory approval, as well as a sign-off from Sierra Wireless shareholders and the B.C. Supreme Court.