Sierra Wireless, Inc., (NASDAQ: SWIR – TSX: SW) (“Sierra Wireless”), a leading provider for wireless modems for mobile computing, and Wavecom S.A. (Paris: AVM – NASDAQ: WVCM) (“Wavecom”), a leading provider of embedded wireless technology for M2M (machine-to-machine) communication, announced that the companies have reached a Memorandum of Understanding (“MOU”) providing for a business combination that will bring together these two industry innovators to form a global leader in wireless data. Pursuant to and subject to the terms of the MOU, Sierra Wireless will make a cash offer of (euro)8.50 per ordinary share of Wavecom, and (euro)31.93 per OCEANE convertible bond (“OCEANEs”), amounting to an aggregate purchase price of approximately (euro)218 million. The Board of Directors of Wavecom has unanimously determined that the proposed acquisition of Wavecom by Sierra Wireless is in the best interest of the Company, its employees, and, subject to consideration of a fairness opinion, its shareholders. In addition, the founders of Wavecom have committed to tender all of their shares to Sierra Wireless, representing approximately 21% of the outstanding shares, in support of the transaction. The Board of Directors has also decided to adjourn Wavecom’s meeting of shareholders which was to be held on December 8, 2008.
The offer represents a premium of 21% over the offer for Wavecom shares announced by Gemalto on October 6, 2008 and a 108% premium over the share price on October 3, 2008, the last trading day prior to Gemalto’s announcement of its offer. For the OCEANEs, the price represents a premium of 2% to their redemption value.
Together, Sierra Wireless and Wavecom will be a market leader in wireless data, and will be uniquely positioned to benefit from the anticipated growth in wireless data for the mobile computing and M2M markets – which are expected to grow to over 200 million units by 2012. The combined company is expected to benefit from significant competitive advantages in the marketplace:
- Industry’s most comprehensive wireless data product portfolio including PC adapters, 2G, 3G and multi-mode embedded modules, M2M terminals, software and solutions
- Long-term relationships with mobile network operators and market-leading OEM (original equipment manufacturer) customers in key markets around the world
- Clear leadership in advanced wireless data technology and innovation, with unparalleled research and development capabilities
“The agreement reached today between Sierra Wireless and Wavecom is a key strategic milestone for both companies. In joining forces, we are creating a global leader in wireless data,” said Jason Cohenour, President and CEO of Sierra Wireless. “The acquisition of Wavecom will be the foundation of our plans to substantially expand our position in the global M2M market. Furthermore, Wavecom will significantly increase our scale and capabilities in Europe and Asia – both of which are important geographical expansion opportunities for the company. Wavecom is aligned with our growth and diversification strategy and adds many complementary capabilities. We believe this acquisition will deliver long-term strategic advantage and profitable growth.”
“Sierra Wireless and Wavecom are a natural match. The two companies share similar histories and a common culture of innovation and technology leadership in wireless data. Joining with Sierra Wireless is a unique opportunity for Wavecom, its customers and employees. Together, the companies are well positioned to provide the most competitive solutions in the market and to become a global leader in wireless data,” said Ronald Black, CEO, Wavecom.
Wavecom will operate as a Sierra Wireless business unit based in Paris, and the two companies will leverage synergies in product development, sales channels and complementary resources to accelerate profitable growth and product leadership in M2M embedded modules, M2M terminals, and M2M software, solutions and services. Furthermore, the addition of Wavecom’s significant presence and capabilities in Europe will provide strong support to Sierra Wireless’ mobile computing business in the region. Additional information regarding product, go-to-market and other integration details will be provided after the transaction is complete. Sierra Wireless expects the transaction to close in the first quarter of 2009.
The transaction is expected to be implemented by way of concurrent but separate public tender offers in both France and the United States for all Wavecom shares, all American Depositary Shares representing Wavecom’s ordinary shares, and all OCEANEs issued by Wavecom. The U.S. offer is anticipated to be open to all U.S. holders of shares and U.S. holders of OCEANEs as well as holders of ADSs, wherever the holder is located. The French offer is anticipated to be open to all other holders of shares and OCEANEs. The offer price will be (euro)8.50 per ordinary share, the U.S. dollar equivalent of (euro)8.50 per ADS (converted as into U.S. dollars as of the date of the settlement of the tender offers), and (euro)31.93 per OCEANE plus accrued but unpaid interest on the OCEANE, in each case in cash. A French offer document has been submitted with further details of the French offer to the Autorite des marches financiers (“AMF”) and will be opened for acceptances once the AMF has granted its clearance in accordance with French law. The offers will be subject to the condition that at least 50% plus one of all voting rights of Wavecom securities be tendered.
Concurrently with the filing of the offer, Sierra Wireless and Wavecom have entered into a MOU, pursuant to which Wavecom has agreed to support the transaction and has also agreed to non-solicitation and right to match provisions. The MOU also provides for payment to Sierra Wireless of a break fee of (euro)3.27 million in certain circumstances.
Sierra Wireless will use cash available on its balance sheet and available credit facilities to fund the purchase of the ordinary shares and the OCEANEs of Wavecom. In that context, Sierra Wireless has drawn a Letter of Credit in the amount of (euro)218 million secured by cash and an (euro)80.5 million secured term facility underwritten by CIBC World Markets Inc. and TD Securities Inc. The term facility is to facilitate the purchase of the OCEANEs until Wavecom redeems them from its existing cash balance upon the successful completion of the transaction. If the transaction does not close, both the Letter of Credit and the secured term facility will be cancelled.
Upon closing, Sierra Wireless expects to be sufficiently capitalized and have ample liquidity from its estimated pro forma cash balance. In addition, Sierra Wireless will have access to committed credit facilities, if needed. As of September 30, 2008, Sierra Wireless had $227 million of cash and cash equivalents, short-term and long-term investments on its balance sheet, and Wavecom had (euro)126 million of cash and cash equivalents and marketable securities on its balance sheet.
CIBC World Markets Inc., Lazard, and TD Securities are acting as financial advisors to Sierra Wireless. Linklaters LLP is acting as French and United States counsel to Sierra Wireless, and Blake, Cassels & Graydon LLP is acting as Canadian counsel.
Merrill Lynch is acting as sole financial advisor to Wavecom. Jones Day is acting as French and United States counsel to Wavecom.
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR – TSX: SW) modems and software connect people and systems to mobile broadband networks around the world. The Company offers a diverse product portfolio addressing enterprise, consumer, original equipment manufacturer, specialized vertical industry, and machine-to-machine markets, and provides professional services to customers requiring expertise in wireless design, integration, and carrier certification.
Wavecom is a leading provider of embedded wireless technology for M2M (machine-to-machine) communication. The Company provides a range of GSM/GPRS, CDMA, EDGE and 3G Wireless CPUs; programmable processors which also act as wireless modules or wireless modems. These are backed by a cellular wireless software suite which includes a real-time operating system (RTOS), a software development environment based on Eclipse(TM), and several Plug-Ins (GPS, TCP/IP, security, Bluetooth(TM), Lua script and more). The Company also offers a wide range of professional and operated services. Wavecom solutions are used for automotive telematics, smart metering, fleet management, GSM/GPS/satellite tracking, wireless alarms, wireless POS (point of sales), WLL (fixed voice), remote monitoring and many other M2M applications. Founded in 1993 and headquartered in Issy-les-Moulineaux (France) near Paris, Wavecom has subsidiaries in Hong Kong (PRC), Research Triangle Park, NC (USA), Farnborough (UK), Munich (Germany) and Sao Paolo (Brazil). Wavecom is publicly traded on Euronext Paris (Eurolist) in France and on the NASDAQ (WVCM) exchange in the U.S.