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IoT module deal falls through

Shares of u-Blox are lower this morning after the Swiss company called off its deal to buy SIMCom’s cellular module business. The two companies said they were unable to “close the deal as originally intended,” but that they are parting amicably and will continue to work together.

“Our strategy for cellular products remains focused on growth,” said u-Blox CEO Thomas Seiler. “For some time now we have been working on adapting our product range to achieve a stronger geographical diversification mainly for the Asian markets, where we make 50% of our global revenue. The strong move to LTE based connectivity will naturally open new strategic windows. Our strong focus and investment in our own chipset development especially for IoT applications is a key part of our strategy. Our guidance indicates a continued strong growth.”

In January, u-Blox said it expected revenue to reach half a billion dollars this year, with $75 million coming from the SIMCom assets. Now the company says it expects revenue of between $422 and $437 million this year. The chipmaker is forecasting operating income in the range of $61 to $66 million.

SIMCom, which is owned by SimTech Group, had agreed to sell its cellular module business to u-Blox for $52.5 million. The deal would have probably helped u-Blox grow its Asian business, and could have saved both companies time and money by streamlining their carrier certification processes under one umbrella.

This is the second proposed acquisition in the IoT module space to fall through this spring. Earlier this month network equipment maker Belden withdrew its $380 million offer to purchase Digi International after Digi amended its earnings projections. Digi had never accepted Belden’s offer.

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