Acquisition accelerates Device-to-Cloud
strategy and scales recurring revenue from IoT services
Sierra Wireless, Inc. (“Sierra Wireless”) (NASDAQ: SWIR) (TSX:
SW), the leading provider of fully integrated device-to-cloud
solutions for the Internet of Things (IoT), and Numerex Corp.
(“Numerex”) (NASDAQ:NMRX) have entered into a definitive merger
agreement (the “Merger Agreement”) under which Sierra Wireless will
acquire Numerex in a stock-for-stock merger transaction (the
“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.
“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,” said Jason
Cohenour, President and CEO of Sierra Wireless. “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 ApprovalThe 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.
AdvisorsRBC Capital Markets is acting as financial
advisor to Sierra Wireless. Blake, Cassels & Graydon LLP,
Skadden, Arps, Slate, Meagher & Flom LLP, and Jones Day are
acting as Sierra Wireless’ legal advisors. Deutsche Bank is acting
as financial advisor to Numerex and Arnold & Porter Kaye
Scholer LLP is acting as Numerex’s legal advisor.
Conference call and webcastSierra Wireless will discuss
the transaction during its scheduled Second Quarter earnings
conference call after market close on Wednesday, August 2, 2017.
Sierra Wireless President and CEO, Jason Cohenour, and CFO, David
McLennan, will host a conference call and webcast at 5:30 p.m.
Eastern time.
To participate in this conference call, please dial the
following:Toll-free (Canada and US): 1-877-201-0168Alternate
number: 1-647-788-4901Conference ID: 29726957
A webcast presentation will also be available for viewing in
conjunction with the conference call. To access the webcast, please
visit:
http://event.on24.com/r.htm?e=1435075&s=1&k=2A13E1D01D92FF840DAA2ACE23144F97.
About Sierra WirelessSierra Wireless (NASDAQ: SWIR) (TSX:
SW) is building the Internet of Things with intelligent wireless
solutions that empower organizations to innovate in the connected
world. Customers Start with Sierra because we offer the industry’s
most comprehensive portfolio of 2G, 3G and 4G embedded modules and
gateways, seamlessly integrated with our secure cloud and
connectivity services. OEMs and enterprises worldwide trust our
innovative solutions to get their connected products and services
to market faster. Sierra Wireless has more than 1,100 employees
globally and operates R&D centers in North America, Europe and
Asia. For more information, visit www.sierrawireless.com.
About Numerex Corp.Numerex Corp. (NASDAQ:NMRX) is a
leading provider of managed enterprise solutions enabling the
Internet of Things (IoT). The Company's solutions produce new
revenue streams or create operating efficiencies for its customers.
Numerex provides its technology and services through its integrated
platforms, which are generally sold on a subscription basis. The
Company offers a portfolio of managed end-to-end IoT solutions
including smart devices, network connectivity and service
applications capable of addressing the needs of a wide spectrum of
vertical markets and industrial customers. The Company's mission is
to empower enterprise operations with world-class, managed IoT
solutions that are simple, innovative, scalable, and secure. For
additional information, please visit www.numerex.com.
Cautionary Note Regarding Forward-Looking
StatementsCertain statements and information in this press
release 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
(“forward-looking statements”) including, but not limited to,
statements and information regarding the benefits of the
transaction, the combined company’s future business prospects,
performance and growth program, revenues and the expectation that
the acquisition will be accretive approximately one year after the
closing of the transaction.
Forward-looking statements:
- Typically include words and phrases
about the future such as “outlook”, “will”, “may”, “estimates”,
“intends”, “believes”, “plans”, “anticipates” and “expects”.
- Are not promises or guarantees of
future performance. They represent our current expectations 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.
- Many factors could cause actual future
events to differ materially from the forward-looking statements in
this press release, 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, including the adoption of the
merger agreement by the shareholders of Numerex 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 merger 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 synergies and
value creation from the transaction will not be realized, or will
not be realized within the expected time period, (vii) the outcome
of any legal proceedings that may be instituted against either
company related to the merger agreement or the transaction, (viii)
our ability to successfully integrate Numerex’s operations, product
lines, and technology within the expected time-line or at all, and
(ix) our ability to implement our plans, forecasts, and other
expectations with respect to Numerex’s business after the
completion of the proposed merger 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.
No Offer or SolicitationThis press release is not
intended to and does not constitute an offer to sell or the
solicitation of an offer to buy, sell or solicit any securities or
any proxy, vote or approval, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of
securities shall be deemed to be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended. This communication may be deemed to be
solicitation material in respect of the proposed acquisition of
Numerex by Sierra Wireless. In connection with the proposed merger,
Sierra Wireless intends to file with the U.S. Securities and
Exchange Commission (“SEC”) a registration statement on Form F-4,
which will include a proxy statement of Numerex that also
constitutes a prospectus of Sierra Wireless. After the registration
statement is declared effective, Numerex will mail the proxy
statement/prospectus to its shareholders. Investors are urged to
read the proxy statement/prospectus (including all amendments and
supplements thereto) and other relevant documents filed with the
SEC carefully and in their entirety if and when they become
available because they will contain important information about the
proposed merger and related matters.
Additional Information about the Merger and Where to Find
ItInvestors may obtain free copies of the registration
statement, the proxy statement/prospectus and other relevant
documents filed by Sierra Wireless and Numerex with the SEC (when
they become available) through the website maintained by the SEC at
www.sec.gov. Copies of the documents filed by Sierra Wireless with
the SEC will also be available free of charge on Sierra Wireless’
website at www.sierrawireless.com or by contacting Sierra Wireless’
Investor Relations Department by telephone at (604) 231-1137 or by
e-mail to investor@sierrawireless.com. Copies of the documents
filed by Numerex with the SEC are available free of charge on
Numerex’s website at investor.numerex.com or by contacting
Numerex’s Investor Relations Department by telephone
770-615-1410 or by e-mail to kgayron@numerex.com.
Participants in Solicitation Relating to the MergerThis
communication is not a solicitation of proxies in connection with
the proposed merger of Sierra Wireless and Numerex. However,
Numerex and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from Numerex’s
shareholders in respect of the proposed merger. Information
regarding Numerex’s directors and executive officers can be found
in Numerex’s Form 10-K/A filed with the SEC on May 1, 2017, as well
as its other filings with the SEC. Additional information regarding
the interests of such potential participants, including their
respective interests by security holdings or otherwise, will be set
forth in the proxy statement/prospectus and other relevant
documents filed with the SEC in connection with the proposed merger
if and when they become available. These documents are available
free of charge on the SEC’s website and from Numerex using the
sources indicated above.
Non-GAAP Financial MeasuresWe disclose non-GAAP financial
measures as we believe they provide useful information on actual
operating performance and assist in comparisons from one period to
another. Readers are cautioned that non-GAAP financial measures do
not have any standardized meaning prescribed by U.S. GAAP and
therefore may not be comparable to similar measures presented by
other companies.
Non-GAAP gross margin excludes the impact of stock-based
compensation expense and related social taxes and certain other
nonrecurring costs or recoveries.
Non-GAAP earnings (loss) from operations excludes the impact of
stock-based compensation expense and related social taxes,
amortization related to acquisitions, acquisition-related and
integration expense, restructuring expense, impairment and certain
other nonrecurring costs or recoveries.
In addition to the above, non-GAAP net earnings (loss) and
non-GAAP earnings (loss) per share exclude the impact of foreign
exchange gains or losses on translation of certain balance sheet
accounts, unrealized foreign exchange gains or losses on forward
contracts and certain tax adjustments.
We use the above-noted non-GAAP financial measures for planning
purposes and to allow us to assess the performance of our business
before including the impacts of the items noted above as they
affect the comparability of our financial results. These non-GAAP
measures are reviewed regularly by management and the Board of
Directors as part of the ongoing internal assessment of our
operating performance. We also use non-GAAP earnings from
operations as one component in determining short-term incentive
compensation for management employees.
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version on businesswire.com: http://www.businesswire.com/news/home/20170802006508/en/
Sierra WirelessInvestors:David Climie, +1 (604)
231 1137VP Investor Relations and Corporate
Developmentdclimie@sierrawireless.comorMedia:Kim Homeniuk,
+1 (604) 233 8028Sr. Manager, Public
Relationskhomeniuk@sierrawireless.com
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