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"The acquisition of CradlePoint is consistent with our strategy of strengthening our differentiation and expanding our position in the mobile computing value chain", said Jason Cohenour, President and Chief Executive Officer of Sierra Wireless. "We believe that adding CradlePoint’s mobile broadband networking and docking solutions to our product portfolio extends our offering and value proposition to mobile operators and vertical OEM customers. Furthermore, we believe that the Mobile Broadband Networking category is poised for rapid growth, and that CradlePoint brings innovative mobile networking technology and talent to our team. We view CradlePoint as an important strategic addition to our business."
"By joining forces with Sierra Wireless, CradlePoint gains immediate access to established global distribution channels, leading edge mobile broadband technology, product marketing expertise, large scale supply chain capabilities and working capital to drive further growth. We bring an innovative product line of mobile broadband networking devices powered by our unique WiPipe(TM) platform, and solid relationships with North American network operators, vertical OEMs, retail channels and application providers", said Pat Sewall, Chief Executive Officer of CradlePoint. "We are enthusiastic about becoming part of the Sierra Wireless team."
Acquisition Rationale
The combination of Sierra Wireless’ leading mobile broadband solutions and CradlePoint’s mobile networking technology and expertise is expected to deliver significant benefits:
 Establishes an immediate presence in the emerging, and potentially high growth, Mobile Broadband Networking category
Expands our mobile computing product line up and addressable market, while leveraging our established global channels
Strengthens our differentiation through enhanced IP networking and embedded software capability
Expands our product offering and value proposition for key Vertical OEM customers in the industrial handheld segment
Acquisition Detail
Under the terms of the definitive agreement, Sierra Wireless will pay cash consideration of $21.8 million and will issue 462,963 shares to the shareholders of CradlePoint. Based on our current stock price, this represents a total transaction value of $30.2 million. Following closing of the transaction, CradlePoint shareholders will hold approximately 1.5% of the combined entity, based on the issued and outstanding shares.
Completion of the acquisition is expected in July, 2008 and is conditional upon, among other things, regulatory and CradlePoint shareholder approval. CradlePoint shareholders representing more than a majority of outstanding shares have signed voting agreements in favor of the transaction.
Following closing, the business will be fully integrated into Sierra Wireless. Pat Sewall, CradlePoint’s CEO, will become Vice-President and General Manager of the Sierra Wireless Mobile Broadband Networking product group in Boise, Idaho and will report to Trent Punnett, Senior Vice President of Marketing and Corporate Development.
CIBC World Markets Inc. was engaged by Sierra Wireless to provide a fairness opinion. Blake Cassels & Graydon LLP is serving as Sierra Wireless’ Canadian counsel. Stoel Rives LLP is serving as U.S. counsel to CradlePoint.
Financial Guidance
Going forward, we expect the acquisition to increase our revenue and earnings. We expect modest restructuring and integration costs to be incurred during the second half of 2008. The acquisition is expected to be accretive to earnings by the end of 2008, excluding restructuring and integration costs. [April 8, 2008]
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