California-based Semtech Corporation has announced that it will buy the cellular IoT (Internet of Things) company Sierra Wireless for $31 per share in an all-cash transaction valued at about $1.2 billion. Semtech, a 60-year-old global supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms, will fund the transaction with cash on hand and $1.15 billion in debt financing from JP Morgan.
The deal will double Semtech’s annual revenue and add more than $100 million of high-margin cloud services recurring revenues, the company said in a statement. It will also expand Semtech’s IoT serviceable available market (SAM) by approximately 10x to $10 billion by 2027.
The deal aims to integrate Semtech’s LoRa wireless modulation technology into Sierra Wireless’ cellular modules that use technologies such as NB-IoT and LTE-M. Also, the companies’ cloud services platforms will be combined, Semtech President and CEO Mohan Maheswaran said in a call announcing the purchase.
“Cellular is not going away and it is complementary to LoRaWAN networks so it makes sense to bring them together,” Maheswaran said.
As a result, customers will have access to an IoT cloud platform that will handle multiple tasks, including device management, network management, and security, he said. They’ll be able to use LoRaWAN networks for low-power, long-range communications and a cellular IoT network for low-latency, high-bandwidth communications.
“We have done a good job with LoRaWAN networks, but having the advantage of a cellular network to connect to is important for IoT simplification and for the acceleration of IoT,” Maheswaran said.
The deal is expected to close later this year pending shareholder approval and the approval of regulatory bodies, including the Supreme Court of British Columbia.