Strengthens Focus on High-Value IoT Solutions
Business
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) (the “Company”), the
leading IoT solutions provider that combines devices, network
services and software to unlock value in the connected economy,
today announced a definitive agreement to divest its Shenzhen,
China-based automotive embedded module product line for US$165
million in cash.
The purchaser, Rolling Wireless (H.K.) Limited, is a consortium
led by Fibocom Wireless Inc. of Shenzhen (Shenzhen Stock Exchange
Code 300638).
“This divestiture enables Sierra Wireless to strengthen our
focus and investment in our fully integrated IoT solutions that
deliver high-value recurring revenue,” said Kent Thexton, President
and CEO of Sierra Wireless. “This transaction will improve our
balance sheet and allow us to expand our R&D centre in
Richmond, British Columbia to accelerate our innovation in
integrated IoT solutions and 5G modules, gateways and routers.”
Strengthened Focus on IoT Solutions
With a strengthened focus on its higher-margin IoT Solutions
business segment, Sierra Wireless will continue to target key
industrial and enterprise markets in North America, Europe and the
APAC region. The improved financial profile means that Sierra
Wireless will be better positioned to address the broader
multi-billion-dollar IoT solutions market opportunity.
The divested product line is part of the Company’s Embedded
Broadband reporting segment. Sierra Wireless will exit automotive
applications but will continue to invest in other product lines in
its Embedded Broadband segment, specifically high-speed cellular
modules typically used in Enterprise applications.
These retained products include 4G LTE and LTE-Advanced cellular
embedded modules that are ordered in large volumes, as well as new
industry-leading 5G modules that will be made available to
customers from its retained business. Sierra Wireless’s 5G modules
and gateways are expected to be available in Q4 2020, extending its
broad portfolio of IoT solutions.
Transaction Details
The sale of the automotive product line includes approximately
US$19 million of cash and is subject to normal working capital
adjustments at closing. The revenue for the automotive product line
in 2019 was US$166 million. The Company will be providing
additional information about the transaction on August 6, 2020,
during its Second Quarter 2020 earnings conference call. The
Company’s financial results for the Second Quarter of 2020 are
expected to be in-line with consensus estimates of research
analysts.
The automotive embedded modules are developed in China by Sierra
Wireless and manufactured in China by outsourced contract
manufacturers for sale to global electronics companies for
integration into new vehicles assembled in China, Europe, and
Mexico. No Canadian-based or U.S.-based employees, operations or
assets will be transferred as part of this transaction.
Sierra Wireless expects that approximately 150 of its employees
will become employees of Rolling Wireless. Approximately 120 of
these employees are located in Mainland China. The other 30 are
located in Europe or in the APAC region.
The transaction is expected to close in the Fourth Quarter of
2020 and remains subject to customary closing conditions, including
approval from China’s Ministry of Commerce. The transaction has the
support of the Sierra Wireless Board of Directors and is not
subject to shareholder approval.
Rolling Wireless is owned 49% by Fibocom Wireless, a
manufacturer and distributor of wireless communication equipment.
The remaining 51% is owned by three leading investment firms based
in China.
Advisors
Jefferies Group LLC is acting as Sierra Wireless’ financial
advisor. Blake, Cassels & Graydon LLP is acting as legal
counsel to Sierra Wireless. Huatai Securities Co. is acting as
financial advisor to Fibocom Wireless and Osler, Hoskin &
Harcourt LLP is acting as legal counsel to Fibocom Wireless.
Longview Communications and Public Affairs is acting as an advisor
to both Sierra Wireless and Fibocom Wireless.
Cautionary Note Regarding Forward-Looking Statements
Certain statements and information in this press release are not
based on historical facts and constitute forward-looking statements
or forward-looking information within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995 and Canadian
securities laws (collectively, “forward-looking statements”)
including, but not limited to, statements and information relating
to the anticipated benefits of the transaction, the anticipating
timing of the closing of the transaction; the Company’s future
business prospects, performance and growth program, expectations
regarding product launches in the Fourth Quarter of this year;
expectations regarding trends and growth in the IoT market and
wireless module market; expectations regarding movement of
employees pursuant to the transaction; and financial guidance for
the Second Quarter of 2020. Forward-looking statements are provided
to help you understand our views of our short- and long-term plans,
expectations and prospects. We caution you that forward-looking
statements may not be appropriate for other purposes.
Forward-looking statements:
• Typically include words and phrases about the future such as
"outlook", "will", "may", “expects”, “is expected”, “anticipates”,
“believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”,
“strategy”, “goals”, “objectives”, “potential”, “possible”, or
variations thereof.
• Are not promises or guarantees of future performance. They
represent our current views and assumptions and may change
significantly. While we may elect to update forward-looking
statements at some point in the future, we specifically disclaim
any obligation to update the forward-looking statements provided to
reflect any change in our expectations or any change in events,
conditions or circumstances on which any such statement is based.
Therefore, you should not rely on these forward-looking statements
as representing our views as of any date subsequent to today.
• Are based on a number of material assumptions, including, but
not limited to, the ability of the parties to receive, in a timely
manner, the necessary governmental and regulatory approvals and the
ability of the parties to satisfy, in a timely manner, the other
conditions to the closing of the transaction, which could prove to
be significantly incorrect.
• Are based on our management's current expectations and we
caution investors that forward-looking statements, particularly
those that relate to longer periods of time, are subject to
substantial known and unknown material risks and uncertainties.
Many factors could cause our actual results, achievements and
developments in our business to differ significantly from those
expressed or implied by our forward-looking statements, including,
but not limited to: (i) the risk that the transaction may not be
completed in a timely manner or at all, which may adversely affect
our business and the price of our common shares, (ii) the failure
to satisfy the conditions to the consummation of the transaction
and the receipt of certain governmental and regulatory approvals,
(iii) the occurrence of any event, change or other circumstance
that could give rise to the termination of the definitive
agreement, (iv) the effect of the announcement or pendency of the
transaction on our business relationships, operating results, and
business generally, (v) risks related to diverting management’s
attention from our ongoing business operations, (vi) the risk that
the expected benefits from the transaction will not be realized,
and (vii) our ability to implement our plans, forecasts, and other
expectations with respect to our IoT Solutions business segment
after the completion of the proposed divestiture and realize
additional opportunities for growth and innovation.
• The foregoing list of factors is not exclusive. Additional
risk factors are discussed in our Annual Information Form and
Management's Discussion and Analysis of Financial Condition and
Results of Operations, which may be found on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov and in our other regulatory filings
with the Securities and Exchange Commission in the United States
and the provincial securities commissions in Canada.
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is the leading IoT
solutions provider that combines devices, network services and
software to unlock value in the connected economy. Companies
globally are adopting IoT to improve operational efficiency, create
better customer experiences, improve their business models and
create new revenue streams. Whether it is an integrated solution to
help a business securely connect edge devices to the cloud, or a
software/API service to help manage processes associated with
billions of connected assets, or a platform to extract real-time
data to make the best business decisions, Sierra Wireless will work
with you to create the right industry-specific solution for your
next IoT endeavor. Sierra Wireless has more than 1,300 employees
globally and operates R&D centers in North America, Europe and
Asia. For more information, visit www.sierrawireless.com.
Connect with Sierra Wireless on the IoT Blog at
http://www.sierrawireless.com/iot-blog, on Twitter at
@SierraWireless, on LinkedIn at
http://www.linkedin.com/company/sierra-wireless and on YouTube at
http://www.youtube.com/SierraWireless.
“Sierra Wireless” is a registered trademark of Sierra Wireless.
Other product or service names mentioned herein may be the
trademarks of their respective owners.
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version on businesswire.com: https://www.businesswire.com/news/home/20200723005946/en/
Media Contact: Kim Homeniuk khomeniuk@sierrawireless.com
Investor Contact: David Climie dclimie@sierrawireless.com
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