More IoT Consolidation as Semtech Takes Over Sierra

IoT chipmaker Semtech has reached a $1.2 billion deal to acquire IoT module specialist Sierra Wireless.

The transaction brings together the worlds of cellular IoT and non-cellular LoRaWAN, and comes just days after Telit took over Cinterion, the cellular IoT business of Thales.

While this deal was primarily aimed at expanding Telit’s presence in various industrial IoT verticals, Semtech’s purchase of Sierra is more about complementary technologies. In recent years, Semtech has been a big proponent of LoRa, which provides a low-bandwidth, low-power, wide-area coverage option for IoT connectivity.

With its use of unlicensed spectrum, LoRa has won a lot of fans for being a cheap and relatively easy way to connect things like sensors, and for doing things like asset tracking. But there’s not much you can do with LoRa before the bandwidth runs out. Cue cellular, especially networks like LTE and 5G, which have the ability to support more bandwidth-intensive applications.

It’s one of the many bowstrings in Sierra. It manufactures modules covering 5G and LTE, as well as low-power and wide-area (LPWA) cellular network technologies, including NB-IoT and its higher-capacity stablemate, LTE-M. It also offers short-range connectivity solutions, including industrial-grade Wi-Fi and BlueTooth modules.

Research firm Transforma Insights said in a report late last year that cellular technology will account for two-thirds of the 4 billion LPWA connections predicted by 2030. tech – will account for 19% of global IoT connections from by the end of the decade, private networks – which tend to include non-cellular networking technologies like LoRa and Wi-Fi – accounting for the rest. This then suggests that the market will demand a mix of different IoT connectivity solutions.

Semtech said the Sierra acquisition puts it in a stronger position to pursue more opportunities across multiple verticals. These include: supply chain, logistics and asset management; utilities such as water, gas and electricity meters; smart cities and buildings; and smart farming and species protection – which include things like tracking wild animals and monitoring the perimeter of a conservation area, for example.

“We believe that the next era of technological growth is the complete digitization of our industrial world – the Internet of Everything. Our vision is to build a simple, horizontal platform with the aim of accelerating this transformation and creating a planet smarter and more sustainable,” Semtech President and CEO Mohan Maheswaran said in a statement Tuesday. “This exciting strategic acquisition of Sierra Wireless is a critical component in realizing this vision through the combination of , LoRa and cloud.Together with Sierra Wireless’ world-class engineering team, we will be able to advance the market with multi-radio solutions that bring new chip-to-cloud services to support customers and grow our business.

Under terms of the deal, Semtech will pay $31 per share for Sierra Wireless, representing a 25% premium to Sierra’s closing price at the end of last week and valuing the company at $1.2 billion. dollars. The transaction will be paid for with cash on hand and debt financing courtesy of JP Morgan. Semtech said the acquisition would approximately double its annual revenue – which stood at $740.9 million last year – and generate approximately $40 million in operational synergies within 12 to 18 months of its completion. finalization. Speaking of which, Semtech said it expects the deal to close in its current fiscal year, which runs through the end of January.

“With Semtech, we will be able to extend the reach of IoT solutions by evolving, optimizing and ultimately delivering an even stronger product portfolio and service model to customers,” said Sierra CEO Phil Brace. . », President and CEO of Sierra Wireless. “Joining Semtech will also allow us to bring cellular and LoRa technology together to create innovative solutions that exceed the expectations of our customers around the world while providing exciting career opportunities for our talented employees within the combined company.

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