Richmond-based Sierra Wireless (TSX:SW;Nasdaq:SWIR) plans to spend $58 million and assume unspecified liabilities to buy assets from France's Sagemcom that enable machines to communicate with each other.
Sierra Wireless, which has long been known for making modems, has so far reached an exclusivity agreement with Sagemcom to buy the firm's "machine-to-machine" (M2M) business.
Sagemcom's machine-to-machine business essentially enables a machine to communicate with another machine via a wirelessly enabled embedded module.
Sierra Wireless has a more than 30% market share in wireless M2M communications. One of its customers is Nespresso, which is using Sierra Wireless' M2M products so service people can monitor coffee machines that are in hotels or coffee shops or corporate centres to see how the machine is functioning and if temperature controls are set correctly.
"Combining Sagemcom's M2M business with Sierra Wireless is a unique opportunity for us to enter new markets and bolster our leadership in wireless M2M communications," said Sierra Wireless CEO Jason Cohenour.
"With a strong market position in key segments, a culture of innovation and experienced teams based in Paris and Shenzhen, Sagemcom M2M is an ideal fit for Sierra Wireless."
Sagemcom's business generates approximately $51.5 million in annual revenue and was "solidly" profitable during the 2011 calendar year, according to Sierra Wireless's news release.
So far, Sierra Wireless has entered into an exclusivity agreement to acquire the assets. Both companies expect a definitive agreement to be reached by the end of September.
