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Sierra Wireless to divest automotive embedded module product line
The company has announced a definitive agreement to divest its Shenzhen, China-based automotive embedded module product line for USD 165 million in cash.
The purchaser, Rolling Wireless (H.K.) Limited, is a consortium led by Fibocom Wireless Inc. of Shenzhen. “This divestiture enables Sierra Wireless to strengthen our focus and investment in our fully integrated IoT solutions that deliver high-value recurring revenue,” says Kent Thexton, President and CEO of Sierra Wireless, in a press release. “This transaction will improve our balance sheet and allow us to expand our R&D centre in Richmond, British Columbia to accelerate our innovation in integrated IoT solutions and 5G modules, gateways and routers.” With a strengthened focus on its higher-margin IoT Solutions business segment, Sierra Wireless will continue to target key industrial and enterprise markets in North America, Europe and the APAC region. The improved financial profile also means that Sierra Wireless will be better positioned to address the broader multi-billion-dollar IoT solutions market opportunity. The divested product line is part of the Company’s Embedded Broadband reporting segment. Sierra Wireless will exit automotive applications but will continue to invest in other product lines in its Embedded Broadband segment, specifically high-speed cellular modules typically used in Enterprise applications. The sale of the automotive product line includes approximately USD 19 million of cash and is subject to normal working capital adjustments at closing. The revenue for the automotive product line in 2019 was USD 166 million. The automotive embedded modules are developed in China by Sierra Wireless and manufactured in China by outsourced contract manufacturers for sale to global electronics companies for integration into new vehicles assembled in China, Europe, and Mexico. Sierra Wireless expects that approximately 150 of its employees will become employees of Rolling Wireless. Approximately 120 of these employees are located in Mainland China. The other 30 are located in Europe or in the APAC region. The transaction is expected to close in the Fourth Quarter of 2020 and remains subject to customary closing conditions, including approval from China’s Ministry of Commerce.
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