Sierra Wireless to Acquire Numerex Corp.

Sierra Wireless to Acquire Numerex Corp.

Acquisition accelerates Device-to-Cloud strategy and scales recurring revenue from IoT services.

Sierra Wireless, Inc., the leading provider of fully integrated device-to-cloud solutions for the Internet of Things (IoT), and Numerex Corp. have entered into a definitive merger agreement under which Sierra Wireless will acquire Numerex in a stock-for-stock merger transaction.

The Transaction is valued at approximately US$107 million based on Sierra Wireless’ closing stock price on August 1, 2017 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 leading global IoT pure-play and will significantly increase its subscription-based recurring services revenue.

Under the terms of the Merger Agreement, 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 approximately 10 percent of the common shares of Sierra Wireless on a fully diluted basis. Concurrent with closing, Numerex’s debt of approximately $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.

Jason Cohenour, President and CEO of Sierra Wireless, said:

“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. 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.”

Transaction Benefits

  • 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 organization 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 four percent of annualized revenue today to more than ten percent of annualized revenue upon completion of the Transaction.

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

Board Approval
The Board of Directors of Sierra Wireless has unanimously approved the Transaction. The Board of Directors of Numerex has unanimously approved the Transaction and recommends that Numerex shareholders vote in favor of the Transaction. Numerex shareholders owning approximately 27 percent of Numerex’s outstanding stock have entered into voting agreements under which they have agreed to vote in favor of the Transaction.

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