Sierra Wireless Buys AirPrime

Sierra Wireless to acquire AirPrime, a supplier of high-speed CDMA wireless products, for 3.7M Sierra shares

June 17, 2003

4 Min Read

RICHMOND, British Columbia -- Sierra Wireless, Inc. (NASDAQ:SWIR)(TSX:SW) announced today a definitive agreement to acquire AirPrime, Inc., a privately-held, leading supplier of high-speed CDMA wireless products. The combined entity is expected to be a well-positioned market leader with a broad product line, innovative engineering, blue chip customers, global channels and a strong balance sheet.

AirPrime is located in Carlsbad, California and was founded in 1999. AirPrime currently has 78 full time employees, many of whom have successfully worked together previously in the wireless and computer industries. The company has achieved significant growth with revenues of $19.2 million in 2002, compared to $6.2 million in 2001. Results are reported in US dollars and in accordance with US GAAP. In addition, AirPrime supplies blue chip customers such as Audiovox, Handspring, Hitachi and Sprint.

"This business combination fits our profitable growth strategy and strengthens our already established market leadership position. AirPrime has demonstrated growth and execution through a challenging period in the market. We expect to achieve significant operational and strategic leverage with the people, products and capabilities of the AirPrime team", said David Sutcliffe, Chairman and Chief Executive Officer of Sierra Wireless.

"By joining forces with Sierra Wireless, AirPrime gains access to global distribution channels, one of the industry's leading brands and working capital for growth. We bring valuable products and engineering capabilities to Sierra Wireless and we are very excited to put the two businesses together", said Jim Kirkpatrick, President and Chief Executive Officer of AirPrime.

Combination Rationale: The combination joins AirPrime, a proven innovator in CDMA embedded modules and OEM business, with Sierra Wireless, the established market and brand leader in CDMA and GSM products, to create a well-positioned market leader with a broad product line, innovative engineering, blue chip customers, global channels and a strong balance sheet. We expect to grow revenues and earnings through a broader product line and as a result of operating and strategic synergies.

Combination Detail: Under the terms of the definitive agreement, Sierra Wireless will issue approximately 3.7 million shares to the shareholders of AirPrime. The value to be received by AirPrime shareholders will equal 3.7 million shares multiplied by the closing price of Sierra Wireless shares on the day of closing.

As a result of the combination, AirPrime shareholders will hold approximately 18.5% of the combined entity, based on the issued and outstanding shares. In addition, Sierra Wireless will provide bridge financing to AirPrime of up to $2.0 million for working capital purposes until the combination is closed.

The completion of the combination is expected in August 2003 and is conditional upon, among other things, regulatory approval and approval from AirPrime shareholders. Sierra Wireless has received voting commitment from AirPrime shareholders representing 82% of AirPrime's shares.

Following closing, the businesses will be fully integrated under a single management team, comprised of both Sierra Wireless and AirPrime personnel. The business will continue under the Sierra Wireless name, will be headquartered in Richmond, British Columbia and will be led by David B. Sutcliffe, Chairman and Chief Executive Officer. Jim Kirkpatrick will become the Senior Vice-President of Engineering of the combined business.

CIBC World Markets Inc. is serving as financial advisors to Sierra Wireless and has provided a fairness opinion. Blake Cassels & Graydon LLP and Davis Wright Tremaine LLP are serving as Sierra Wireless' Canadian and U.S. counsel, respectively. Digital Coast Partners, LLC is serving as financial advisors to AirPrime. Coudert Brothers LLP and Borden Ladner Gervais are serving as AirPrime's U.S. and Canadian counsel, respectively.

Financial Guidance: There is no change to our Q2 2003 guidance, issued on April 24, 2003. Going forward, we expect the combination to increase our revenue and earnings growth as well as increase our capabilities for strategic initiatives. Restructuring costs will be incurred in both companies during Q3 2003 and integration costs will be incurred by the combined entity during the second half of 2003. The combination is expected to increase revenue and be accretive to earnings in Q4 2003, excluding integration costs.

We plan to provide quantitative guidance, including restructuring and integration costs, for the second half of 2003 when we report Q2 results on July 17, 2003.

Sierra Wireless Inc.

AirPrime Inc.

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