Shareholders seemed to cheer Sierra Wireless Inc.’s $20 million all-stock acquisition of rival modem maker AirPrime Inc., sending the company’s stock up almost 9 percent after the news to about $5.90 per share.
Sierra said the move will bolster its revenues and product portfolio. AirPrime focuses specifically on the market for CDMA modems and counts Audiovox, Handspring, Hitachi and Sprint as customers. Founded in 1999, AirPrime has 78 employees and total revenues of $19.2 million last year, up from its $6.2 million in revenues in 2001. Sierra makes both CDMA and GSM gear.
“This business combination fits our profitable growth strategy and strengthens our already established market leadership position,” said David Sutcliffe, Sierra’s chairman and chief executive officer. “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.”
The combined company will continue under the Sierra name.
Separately, Sierra said it signed a resale agreement with Panasonic Canada Inc., a division of Matsushita Electric Industrial Co., Ltd. (MEI) of Japan. Under the deal, Panasonic will distribute Sierra’s product line through its value-added reseller channels in Canada.