This article examines the Semtech to buy Sierra Wireless in $1.1 billion deal and what it means for shareholders. We’ll examine the price per share, the impact on Semtech’s cloud services capabilities and expected revenue growth. You’ll also learn whether the deal is worth the price. After you read this article, you should have a better understanding of the deal. After all, the value of your investment depends on it.
Semtech to acquire Sierra Wireless
Semiconductor supplier Semtech Corp. has announced that it will acquire Sierra Wireless in a $1.2 billion all-cash deal. The deal is expected to increase Semtech’s annual revenue by $100 million, and add significant high-margin IoT cloud services recurring revenue. However, there are several caveats to the deal. Here’s a look at what you need to know to fully appreciate the potential benefits of this merger.
Price per share
Semiconductor supplier Semtech Corp. has agreed to acquire “Internet of Things” solutions provider Sierra Wireless in a $1.2 billion deal. The deal is expected to close in 2023. The deal is expected to result in a nearly two-fold increase in revenue for Semtech, which has about a $11 billion market cap. Sierra Wireless shares closed at $31 on Friday, 25% higher than when the news broke.
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Impact of acquisition on Semtech’s cloud services capability
The Semtech acquisition of Sierra Wireless will increase the company’s revenue by more than two times and add $100 million in high-margin recurring cloud services revenue. The combined businesses will be able to offer a differentiated IoT portfolio and build their Cloud services capabilities, including device management, geolocation, and enhanced security. The combined companies have a combined IoT portfolio of over one million products and solutions that can help businesses manage their connected devices.
Expected revenue growth
Sierra Wireless was founded in Richmond, B.C., and makes cellular hardware and software to connect sensors to IoT wireless networks. Last fiscal year, Sierra Wireless booked US$448.6 million in revenue but also lost US$49.3 million, but results have steadily improved. In its first quarter, the company generated revenue of US$173 million, exceeding analyst expectations. The company expects its second quarter to generate revenues of about US$160 million to US$175 million.
Integration with Semtech’s LoRa IoT platform
Getting started with the integration of Semtech’s LoRa IOT platform can be as easy as claiming a device from the Semtech Learning Center. To do this, you’ll need to add the device to the Things Stack console. On the Add Device page, you’ll need to tick the box labelled External Join Server. Next, you’ll need to add the device to the LoRa Cloud Device Join Service.