Shares of Sequans Communications (SQNS) are soaring on Friday.
The company signed a definitive agreement with QUALCOMM Incorporated QCOM to sell its 4G IoT technology for $200 million.
Qualcomm's acquisition includes certain employees, assets and licenses. The transaction is subject to customary closing conditions, including French regulatory approval.
This latest development enables Sequans to continue servicing the IoT market with a strengthened balance sheet, while retaining its license for 4G IoT technology and full ownership of 5G technology.
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“We are committed to pushing the boundaries of innovation to deliver cutting-edge 4G/5G semiconductor solutions that meet the evolving needs of AI-powered Internet of Things applications,” said Georges Karam, CEO of Sequans.
The transaction will not affect Sequans' existing contractual obligations or operations with customers, suppliers and industry partners. The transaction is expected to close by the end of October 2024.
Qualcomm is strengthening its Industrial IoT portfolio by offering low-power solutions that provide reliable and optimized cellular connectivity for IoT applications, further expanding and accelerating its role in digital transformation at the edge.
“Digital transformation is being driven by high-performance processing and intelligence at the edge, and Qualcomm is positioned to grow in one of the largest addressable opportunities,” said Nakul Duggal, group general manager, automotive, industrial and embedded IoT and cloud computing, Qualcomm Technologies.
Under the terms of the agreement with Qualcomm, Sequans will receive $185 million in cash, $175 million at closing and up to an additional $10 million after a one-year guarantee period.
Additionally, $15 million of this amount has already been paid pursuant to a pre-transaction manufacturing license agreement executed in June 2024 and is expected to contribute to the total purchase price of $200 million.
Additionally, Seequans reported preliminary financial results for the second quarter, reporting total revenue of $9.7 million, up from $9.2 million in the same period last year. Non-IFRS diluted loss per ADS was $0.09, down from a loss of $0.10 in the same period last year. Cash and cash equivalents at the end of June were $13.1 million, down from $0.5 million at the end of March.
“Because the purchase price allocation for the pending Qualcomm transaction will not be finalized until the fourth quarter, we are unable to communicate the expected impact of the transaction on our license and services results for the second half of the year. Focused on product revenue, we expect a slight increase in the third quarter compared to the second quarter, with further strength in the fourth quarter of 2024,” Sequans added.
Overall, the company expects its full-year 2025 product revenue to be higher compared to 2024 as more products are expected to enter mass production over the coming quarters.
Price Action: SQNS shares were up 157% in pre-market trading, trading at $1.40 as of last check on Friday.
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