Sierra Wireless expands into M2M with acquisition of Wireless Maingate

Sierra Wireless to acquire Sweden’s Wireless Maingate for $90m; expanding its position in the M2M value chain with the addition of wireless connectivity and value-added services for European customers

Sierra Wireless expands into M2M with acquisition of Wireless Maingate

Sierra Wireless is to acquire Wireless Maingate AB (Maingate), a provider of machine-to-machine (M2M) connectivity and data management services based in Sweden, for US $90m (£57.8m) in cash. The transaction is expected to close in February 2015.

“The acquisition of Maingate is a strong strategic fit for Sierra Wireless, helping us to accelerate our device-to-cloud mission with the addition of leading edge wireless M2M connectivity and managed services,” said Jason Cohenour, Sierra Wireless president and CEO.

“Maingate has a strong base of top-tier M2M customers and a proven technology platform that we believe will enable market expansion and accelerated services growth through our channels.”

Maingate provides managed M2M connectivity and information management services to more than 500 customers across Europe, reaching a subscriber base of more than 500,000 connected devices.

With a strong base of recurring revenue, Maingate expects 2014 revenue of over US $19m (£12.2m) and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of US $6m (£3.8m). Sierra Wireless expects the transaction to be immediately accretive to earnings.

“Joining with Sierra Wireless enables us to accelerate our growth in Europe and broaden our customer base,” said Baard Eilertsen, CEO of Maingate. “Enterprises throughout Europe are looking for efficient ways to connect their assets and digitize their businesses, and the combined offering from Sierra Wireless and Maingate is the perfect solution for that.”

Founded in 1998, Maingate was a pioneer in offering wireless services specifically for the M2M market. The company’s services are based on its managed M2M connectivity platform, and support direct customer interaction through its specialized service management platform, Maingate Manager.

Maingate services are delivered along with dedicated operations and customer support, creating an optimal environment for M2M deployments. Maingate’s value-added services include over-the-air subscription provisioning and tailored connectivity solutions for a broad range of M2M industries.

Together, Sierra Wireless and Maingate will be able to offer customers in Europe complete device-to-cloud solutions, with fully integrated hardware, embedded software development tools, cloud-based application development, device and subscription management, and wireless services.

Sierra Wireless will acquire all the outstanding shares of Maingate, including those held by Nordic private equity fund Verdane Capital VI, and retain the company’s M2M business which includes wireless connectivity services for M2M.

Maingate’s current shareholders will retain the Enterprise Solutions business (which will be transferred to a new company called Maingate Enterprise Solutions AB prior to closing), which provides real-time data management tailored for energy services.

CIBC World Markets Inc. is acting as financial advisor, and Blake Cassels & Graydon LLP and Advokatfirman Delphi are acting as legal counsel, to Sierra Wireless. Jefferies International Limited is acting as financial advisor and Advokatfirman Vinge KB is acting as legal counsel for Maingate.

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