Wireless technology developer Wavecom SA has announced it will purchase Sony Ericsson’s machine-to-machine M2M Communications Business Unit, which specializes in automotive and industrial wireless solutions.
Under the terms of the deal, Wavecom will pay up to 32.5m euros ($39.5m) in cash, dependent on certain performance milestones over the next six to nine months.
In return it will acquire the business unit that includes the new GX64 GSM/GPRS product family, the GX47/48 GSM/GPRS product family, the CM42/52 CDMA1xRTT product family, as well as the company’s global assets. The transaction does not include any assets or activities related to Sony Ericsson’s mobile phones, accessories, or PC card business, which will remain part of Sony Ericsson.
This event marks the first consolidation of two major players in the wireless M2M space, said Ron Black, Wavecom’s CEO.
Wavecom develops wireless plug-in modules based on chipsets of its own design, together with the Open AT software platform for developing apps in the areas of GPS, telematics, telemetry, real-time asset tracking, and security. Its products are all in the cellular arena, using both the GSM and CDMA radio access technologies. Competitors include Siemens AG and Telit Communications Plc.
Speaking to Computer Business Review, a Wavecom spokesperson confirmed that there is very little overlap between the two organizations. She said the Sony Ericsson unit has a solid presence in the North American automotive and fleet management market, which will complement Wavecom’s automotive customer base in Europe. Likewise, Sony Ericsson has a strong presence in metering in Asia, which again will complement Wavecom’s assets in this area. She confirmed that Wavecom would gain 60 R&D staff and 30 sales people from the transaction.
Sony Ericsson’s M2M Communication Business Unit is headquartered in Research Triangle Park, North Carolina. The unit posted a net loss on revenues of roughly 65m euros ($79m) in 2005, and Wavecom admitted the acquisition would put pressure on its short-term profitability.
Issy-les-Moulineaux, France-based Wavecom has been through a tough few years. In 2004, it ran into trouble as the wireless modules it offered to Asian manufactures were undercut by cheaper chipsets and reference design offerings. It pulled out the mobile handset market as the result of a huge restructuring operation that reduced its headcount from 860 to 300. It also shut down its semiconductor design operation and now concentrates on vertical markets including automotive, machine-to-machine, and consumer products such as wireless local loop phones, mobile computers, and wireless PDAs.
For the year ending December 31, Wavecom posted net income of 9.1m euros ($11m), down from 78.7m euros ($95.7m) in 2004. Sales declined nearly 15% to 129m euros ($157m) from 151.5m euros ($184m) in 2004.
It expects the deal to be completed at the end of this month.