Sierra Wireless, the Canadian wireless communications designer and manufacturer, is to acquire managed Internet of Things (IoT) products and services provider Numerex for $107m.
According to Sierra Wireless, which offers a portfolio of 2G, 3G and 4G embedded modules and gateways, the decision to acquire Numerex will help it to become a leader in the IoT services and products space.
“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, Sierra Wireless’ president and CEO.
“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.”
Positive move for Numerex
Numerex was founded in 1992 – one year before Sierra Wireless. It initially focused on wireline-based telemetry data communications, an area which has since been subsumed into the machine-to-machine (M2M) space. Since then, it has moved into the M2M and IoT space, and made several acquisitions to expand its portfolio. Many of the companies it acquired focused on wireless products for specific industries – including government and the oil and gas industry.
“We believe that combining with Sierra Wireless will strengthen Numerex’ business, advance its product offerings, and accelerate the growth of recurring revenue streams,” said Ken Gayron, interim CEO and CFO.
The board of directors of each of Numerex and Sierra Wireless unanimously approved the transaction. When it goes through, Numerex will become a subsidiary of Sierra Wireless and approximately 10 percent of the common shares of Sierra Wireless will be held by Numerex shareholders on a fully diluted basis.
IoT as a differentiator
According to Clive Longbottom, analyst at IT research company Quocirca, vendors such as Sierra Wireless have needed to differentiate themselves and IoT was the obvious place to go.
“There is a major need for M2M capabilities in both the wired and wireless environments. Sierra seems to be at the forefront of making such a transformation: its acquisitions are creating a reasonably comprehensive and interesting portfolio for the IoT,” he said.
“We will have to see how much further through the IoT stack Sierra decides that it needs to go – and whether it will do this through further acquisitions or through strategic partnerships with those providing full business analytics, AI, deep learning and so on,” he added, before suggesting that Sierra could also choose to go further down into the device arena, even though Numerex has some device capability, particularly in its tank systems.
“I would suggest that anything much further [in the device space] would be predominantly through partnerships with the likes of Honeywell, GE and others who have a long history there,” he said.
The transaction is expected to close by the end of 2017, subject to Numerex shareholder approval and regulatory and government approval.