The IoT is growing rapidly, with analyst and research firms universally predicting billions and even, fantastically, trillions of dollars in CAGR over the next decade. Although much of the growth will happen thanks to the exploding startup economy, many of the major players are making moves to expand their capabilities through additional funding rounds, acquisition and mergers. Over the last several months alone, we’ve seen billions of dollars and stock options change hands as players join forces and absorb other players in strategically chosen verticals, while major IT companies gather cash from eager investors looking to get in on the action.
Let’s take a look at a few of the most important recent deals.
Numerex, a major provider of enterprise solutions enabling the Internet of Things (IoT), and Sierra Wireless, a well-recognized provider of fully integrated device-to-cloud solutions for the IoT, have entered into a definitive merger agreement under which Sierra Wireless will acquire Numerex in a stock-for-stock merger transaction.
The reported equity value will be about $107 million based on Sierra Wireless’ closing stock price on August 1, 2017 of $29.65 per share, and represents a premium of 17.5 percent to Numerex’s volume weighted average share price for the 20 trading day period ending August 1, 2017. Under the terms of the merger, Numerex shareholders will receive a fixed exchange ratio of 0.1800 common shares of Sierra Wireless for each share of Numerex common stock.
“We believe that combining with Sierra Wireless provides us the opportunity to work with and take advantage of world-class talent and technology to improve our product offerings for our customers,” said Kenneth Gayron, Interim CEO and CFO, Numerex, in a statement. “The transaction also provides our shareholders the opportunity to participate in the upside potential of the combined company.”
When the whole deal is completed, Numerex will become a subsidiary of Sierra Wireless and about 10 percent of the common shares of Sierra Wireless will be held by current Numerex shareholders. Concurrent with closing, Sierra Wireless will repay Numerex’s outstanding current debt of about $20 million in cash. The deal is expected to close by the end of 2017, subject to the receipt of Numerex shareholder approval and the required regulatory and government approvals, and satisfaction of other customary conditions.
“The acquisition of Numerex accelerates our IoT device-to-cloud strategy by adding an established customer base, significant sales capacity, proven managed solutions and recurring revenue scale,” said Jason Cohenour, President and CEO, Sierra Wireless. “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.”
This might be the most important recent combination, with these two major enterprise providers combining resources under the Sierra Wireless banner. This should give any competitors pause in the cloud and connectivity spaces, since the joint capabilities represented here position the company to step into the ring with the biggest IoT companies in the world.
The Sierra-Numerex deal wasn’t the only major one announced in the last month, however. Pacific Special Acquisition Corp., a special purpose acquisition company, and Borqs International Holding Corp., have successfully concluded a merger by which BORQS became a wholly-owned subsidiary of Pacific and the former stockholders of BORQS acquired a majority of the outstanding equity of the company. The transaction was approved at a special meeting of the company's shareholders held on August 10, 2017.
“We are entering an exciting phase of our company where the resources of the public capital market will certainly fuel our R&D efforts and business growth in the burgeoning IoT industry,” said Pat Chan, Chairman and CEO, BORQS. “We will be able to execute more rapidly and efficiently in delivering and scaling new designs and products to the world's connected consumers.”
Meanwhile, Centerbridge Partners, a private investment firm, has announced the completion of its $1.26 billion acquisition of enterprise software providers Syncsort Incorporated and Vision Solutions from affiliates of Clearlake Capital Group. Clearlake, which acquired Syncsort in 2015 and Vision in 2016, will retain a minority ownership stake in the combined company.
“We are pleased to open an exciting new chapter in Syncsort’s rich history, and execute strategies to capitalize on the many growth opportunities provided by the combination of Syncsort’s market-leading Big Iron to Big Data platform and Vision’s leading business resilience software solutions,” said Jared Hendricks, Senior Managing Director, Centerbridge. “Given the innovation and talent that the teams contribute to this combination, the laser focus on high-value use cases and strategic partnerships to drive significant organic growth, and a proven track record executing acquisitions, the future is extremely bright at Syncsort. We are excited about the prospects for the new company and continuing participation from our partners at Clearlake.”
In vertical market news, German-based Osram, the rapidly growing international lighting company that includes Sylvania and Traxon, will acquire Digital Lumens, a company that specializes in industrial IoT solutions. Plans are in place to integrate some of Osram’s existing digital services into the Digital Lumens platform. This includes the navigation and location solution Einstone, which uses Bluetooth to send targeted offers to people's smartphones, most often used in retail environments. Osram said it will increasingly be positioning itself not only as a provider of platform-based industrial IoT applications but also as a partner for tailor-made solutions, which optimize processes within buildings.
“The acquisition of Digital Lumens puts Osram in a strong position when it comes to offering future-focused digital solutions for the facilities management sector and IoT applications,” said Stefan Kampmann, CTO, Osram Licht. “By integrating software and sensors in a single platform, we will be able to give businesses a deeper insight into the environment within their buildings and their utilization of space. As a company that understands space, Osram is taking the next step in developing new business models that go beyond lighting. What's more, the platform is also compatible with light products made by other manufacturers.”
In the world of new investments, one of the key new rounds came to Cubic Telecom, a global Internet of Things (IoT) connectivity platform company, which recently closed a $48 million Series C investment round. The new investment, which brings the company’s total funding to more than $80 million, is funded by four participants, including previous investors Qualcomm Incorporated and Audi Electronics Venture GmbH, a subsidiary of AUDI AG. New investors include Valid Soluciones Tecnologicas SAU and Ireland Strategic Investment Fund (ISIF).
Qualcomm and Audi were both early investors and steadfast supporters in Cubic, and this most recent investment with new partners Valid and ISIF will fuel the Irish company’s meteoric continued growth and market expansion. Barry Napier, Chairman and CEO, Cubic Telecom, said, “Without exception, our customers are committed to providing an intelligent connectivity experience to their end-users, and today’s announcement will help Cubic continue to deliver on that promise.”
The company said that this new investment round will accelerate continued refinements of its IoT platform and extend its global footprint. The company will also expand its engineering capabilities in Dublin, bringing more job creation to the company’s headquarters.
In a smaller round, but equally telling about key areas of IoT industry interest, Israeli startup Axonius has announced $4 million in new seed funding for its mission to secure and manage the growing billions of connected devices in use by businesses. Backing for the technology platform, which is designed to let IT and security operations teams enable the agile and secure adoption and usage of the widest variety of current and future devices on the network, comes from YL Ventures, with participation from Vertex Ventures and Emerge.
“We are experiencing a Cambrian-like explosion on our networks,” said Yoav Leitersdorf, managing partner, YL Ventures, who led the Axonius funding round. “Mobility, cloud and IoT are creating a near exponential increase in the types and numbers of user, compute and new devices connecting to enterprise networks. With this explosion comes the inherent cyber risk associated with the lack of visibility, security and control.”
Finally, in a recent barometric reading of the growing power of the IoT, Japanese company SoftBank Group Corp, which has been working in and investing in connected technology since the early 1990s, reported its operating income in the fiscal first quarter, which ended in June. In that quarter alone, the company’s income rose 50 percent year-over-year to $4.33 billion from $2.92 billion in the previous first quarter. In the company’s corresponding year-earlier period, their net sales and EBITDA increased 3 percent.
Now, that’s an acceleration of which it’s worth taking note, I’d say.
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