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Netgear Nabs Sierra Wireless' AirCard Business for $138 Million

Tue, 01/29/2013 - 10:05am
Andrew Berg

Ahead of its fourth quarter earnings call tomorrow, Netgear Tuesday announced an agreement to acquire the operations of Sierra Wireless' AirCard buisness. 

According to a press release, the purchase price is approximately $138 million in cash. The final purchase price is subject to adjustments after closing. 

Sierra Wireless' AirCard business produces LTE-enabled network access devices for latpops and mobile devices and includes cellular-enabled USB dongles, dedicated hotspots, and data cards, as well as accessories and software.  

Under the terms of the transaction, Netgear will acquire the assets and operations of the AirCard business, including customer relationships, products, intellectual property, inventory, and fixed assets, and assume certain liabilities, including warranty commitments and other customer obligations.

Patrick Lo, chairman and CEO of Netgear, said in a statement that the company believes the AirCard's LTE network technology represents a huge market opportunity, especially in emerging markets and rural areas where high speed broadband Internet access is currently limited. 

Netgear said the AirCard business has a 12 month trailing net revenue run rate of approximately $247 million through December 2012.

The AirCard business currently employs about 160 employees, primarily in sales, marketing, and R&D. All personnel will be transferred to Netgear, as well as certain facilities in Carlsbad, CA and Richmond, BC.

Sierra Wireless has chosen to retain its AirPrime embedded modules for M2M and Mobile Computing business, as well as its AirLink intelligent gateways and routers, and AirVantage M2M cloud product lines. 

Sierra Wireless said in a statement that it will be narrowing its focus to become an M2M and connected device pure play company.

Jason Cohenour, president and CEO of Sierra Wireless, said in a statement that the the transaction will provide "significant financial resources and capacity to accelerate our growth in M2M and connected device solutions.”

In all, Sierra Wireless expects to realize net cash proceeds of approximately $100 million from the asset sale, after related taxes, expenses, and funds held in escrow. The transaction is expected to close in March 2013, subject to customary closing conditions. 

Netgear took the announcement as an opportunity to update its fourth quarter guidance. The company said it expects to achieve net revenue of $305 million to $310 million and non-GAAP operating margin within the 11 percent to 11.5 percent range, both of which are within the guidance the company provided last quarter for net revenue and non-GAAP operating margin, respectively.

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