Feeney Wireless brings expertise in managed services,
SaaS, and connectivity solutions; combination serves as the
cornerstone to execute on Novatel Wireless' vision to deliver the
broadest, most comprehensive IoT portfolio
Acquisition doubles current IoT revenue run rate;
immediate accretion to earnings
Diversifies business model; expands hardware product
portfolio
Conference call and webcast - March 30, 2015, 5:00PM EDT
/ 2:00 PDT
Novatel Wireless, Inc., (Nasdaq:MIFI), a leading provider of
wireless solutions for the Internet of Things (IoT), and Feeney
Wireless (FW) (www.feeneywireless.com), a privately held, US-based
provider of end-to-end IoT solutions and services, today announced
that Novatel Wireless completed the acquisition of FW for $25
million in a combination of cash and stock, with up to an
additional $25 million in potential earn-out payments over four
years based on FW's revenue and gross profit performance.
Founded in 1999, FW is an IoT products, systems integration and
services company that specializes in fixed and mobile
cellular-based wireless IoT solutions with a focus on product
innovation, speed to market, and rapid commercialization of new
connected devices. FW has a strong base of enterprise and
government customers, a proven carrier SaaS-based management
platform that enables 250,000 subscribers, and a deep bench of
development talent that will help Novatel Wireless expand its
addressable markets and drive growth in services revenue. FW has 91
full-time employees. Gartner Research estimates that IoT product
and service suppliers will generate incremental revenue exceeding
$300 billion in 2020.
"With this strategic combination, we create an innovative new
model positioning Novatel Wireless as a total IoT solutions and
services leader, from hardware to SaaS to connectivity. This
transaction creates a powerful engine for generating immediate and
long-term value for our shareholders," said Alex Mashinsky, Novatel
Wireless CEO. "FW has established a remarkable ecosystem of
products, system integration solutions, engineering, and consulting
services that aligns with our strategy to simplify IoT for our
customers and partners. Their recently released IoT application
framework, Crossroads, is a great example of this and is already
being deployed with key anchor customers."
"Joining with Novatel Wireless enables us to accelerate growth
on a global scale and broaden our customer base," said Ethan
Ralston, FW President and CEO. "Our complementary strengths provide
leverage for delivering a compelling, proactive approach to
end-to-end solutions that combine best in class technology and
engineering with best in class services and systems
integration."
"This combination catapults both companies to a new level as we
continue to build on our aligned mission to simplify the complexity
of IoT through complete end-to-end solutions," added Bob Ralston,
FW Chairman.
Including a solid and growing base of recurring revenue, FW
plans to generate at least $38 million in revenue in 2015. Novatel
Wireless expects the transaction to be immediately accretive to its
earnings, with estimated non-GAAP earnings before interest, taxes,
depreciation, and amortization (EBITDA) from FW of approximately $3
million in 2015.
The combined companies will leverage synergies in product
development, engineering services, global channels and
complementary resources.
As part of the financing for this transaction, HC2 Holdings,
Inc., Novatel Wireless' largest shareholder, early-exercised
approximately $8.6 million of warrants to purchase Novatel Wireless
common stock that were issued in September 2014, and that otherwise
could have remained outstanding until September 2019.
Inducement Stock Options for FW Employees
In connection with the acquisition of FW, Novatel Wireless
granted inducement stock options to 91 FW employees to acquire an
aggregate of 323,000 shares of Novatel Wireless common stock under
the Company's 2009 Omnibus Incentive Compensation Plan. The
inducement stock options were made without shareholder approval in
reliance upon the exception provided under NASDAQ Listing Rule
5635(c)(4) relating to awards granted in connection with the hiring
of new employees, including grants to transferred employees in
connection with an acquisition. The inducement awards became
effective upon the closing of the acquisition. Stock options
granted to FW employees have an exercise price of $4.65 per share.
The options have a ten-year term and will become exercisable on the
first year anniversary of the date of grant for 25% of the total
option shares, and the remaining 75% will become exercisable in
equal monthly increments each month thereafter for three years. In
the event of termination of employment, all unvested options will
terminate.
Conference call and webcast
Novatel Wireless CEO, Alex Mashinsky, and Executive Vice
President and CFO, Michael Newman, will host a conference call and
webcast with analysts and investors today, March 30, at 5:00 PM
Eastern time (2:00 PM PT).
To participate in this conference call, please dial the
following number approximately ten minutes prior to the
commencement of the call.
Toll-free: 877-317-6789
International: 412-317-6789
A link to the webcast of the conference call can be found under
the Events section of the company's investor relations website at:
http://nvtl.com/about/investors/.
The webcast will remain available at the above link for one year
following the call.
About Novatel Wireless
Novatel Wireless, Inc. (Nasdaq:MIFI) is a leader in the design
and development of M2M wireless solutions based on 3G and 4G
technologies. The Company delivers Internet of Things (IoT) and
Cloud SAAS services to carriers, distributors, retailers, OEMs and
vertical markets worldwide. Product lines include MiFi® Intelligent
Mobile Hotspots, USB modems, Expedite® and Enabler embedded
modules, Mobile Tracking Solutions, and Asset Tracking Solutions.
These innovative products provide anywhere, anytime communications
solutions for consumers and enterprises. Novatel Wireless is
headquartered in San Diego, California. http://www.nvtl.com. @MiFi
(Twitter)
MiFi is a registered trademark of Novatel Wireless, Inc. – the
creators and patent holders of MiFi technology.
About FW
FW is a team of innovators with big ambitions on a mission to
connect things. Founded in 1999, FW is an IoT products, systems
integration and services company headquartered in Eugene, Oregon.
FW specializes in fixed and mobile cellular-based wireless
solutions with a focus on product innovation, speed to market, and
rapid commercialization of new connected devices.
www.feeneywireless.com
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements relate to a variety of matters, including, without
limitation, statements related to the ability of Novatel Wireless
to expand its addressable markets, drive growth in service revenue
and broaden its customer base as a result of the acquisition of FW,
the revenue and EBITDA expected to be generated by FW during 2015
and other statements that are not purely statements of historical
fact. These forward-looking statements are made on the basis of the
current beliefs, expectations and assumptions of the management of
Novatel Wireless and are subject to significant risks and
uncertainty. Investors are cautioned not to place undue reliance on
any such forward-looking statements. All such forward-looking
statements speak only as of the date they are made, and Novatel
Wireless undertakes no obligation to update or revise these
statements, whether as a result of new information, future events
or otherwise. Although Novatel Wireless believes that the
expectations reflected in these forward-looking statements are
reasonable, these statements involve many risks and uncertainties
that may cause actual results to differ materially from what may be
expressed or implied in these forward-looking statements. For a
further discussion of risks and uncertainties that could cause
actual results to differ from those expressed in these
forward-looking statements, as well as risks relating to the
business of Novatel Wireless in general, see the risk disclosures
in the Annual Report on Form 10-K of Novatel Wireless for the year
ended December 31, 2014, and in other filings made with the SEC by
Novatel Wireless (available at www.sec.gov).
CONTACT: Investor Relations
Michael Sklansky
msklansky@nvtl.com
646-270-5855
Editorial
Anette Gaven
agaven@nvtl.com
619-993-3058
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