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UPDATE: NETGEAR Enters Into Agreement To Acquire Select Assets Of Sierra Wireless AirCard Business

NETGEAR (NASDAQGM: NTGR), a global networking company that delivers innovative products to consumers, businesses and service providers, today announced that on January 28, 2013, it entered into an agreement to acquire select assets and operations of the Sierra Wireless, Inc. ("Sierra Wireless") AirCardĀ® business. NETGEAR management will hold an investor conference call tomorrow, January 29, 2013 at 8:30 a.m. EST (5:30 a.m. PST) to discuss the agreement.

On January 28, 2013, NETGEAR entered into an Asset Purchase Agreement with Sierra Wireless to acquire the operations of the AirCard business, including customer relationships, certain intellectual property, inventory and fixed assets of the Sierra Wireless AirCard business. The purchase price is approximately $138 million in cash. The final purchase price is subject to adjustments to be made after closing. The transaction, which is subject to customary closing conditions, including the receipt of necessary regulatory clearances, is expected to close by the end of NETGEAR's fiscal first quarter.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, "We are excited to announce that we have entered into an agreement to acquire select assets of the Sierra Wireless AirCard business. We expect this acquisition will accelerate the mobile initiative of our service provider business unit to become a global leader in providing the latest in LTE data networking access devices. We believe that LTE network technology represents a huge market opportunity, especially in emerging markets and rural areas where high speed broadband Internet access is currently limited. This asset acquisition reinforces NETGEAR's commitment to develop innovative products for the next generation of Internet service providers"

Christine Gorjanc, Chief Financial Officer of NETGEAR, said, "We are excited about the opportunities this transaction gives us, and we expect this acquisition to be accretive to non-GAAP earnings in the first full quarter that NETGEAR operates the AirCard business. Based on current information, the business we are acquiring has a 12 month trailing net revenue run rate of approximately $247 million through December 2012."

"We are also taking this opportunity to update NETGEAR's estimates for the recently completed fourth quarter of 2012," Ms. Gorjanc continued. "We currently expect to achieve net revenue of $305 million to $310 million and non-GAAP operating margin within the 11% to 11.5% range, both of which are within the guidance we provided last quarter for net revenue and non-GAAP operating margin, respectively. The non-GAAP tax rate for the fourth quarter of 2012 is currently expected to be approximately 40%, which is higher than the approximately 33% that we had previously estimated. We will provide all the details on our 2012 fourth quarter and year-end results in our normally scheduled earnings release in February."

With the completion of the asset acquisition, approximately 160 employees located primarily in Carlsbad, California and Richmond, British Columbia are expected to be integrated into NETGEAR's service provider business under Michael Clegg, Senior Vice President and General Manager of NETGEAR's service provider business unit.

Posted-In: News M&A

 

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