US-based IoT specialist Telit looks set to take a bigger slice of the European market.
Late last week it agreed to acquire French defence giant Thales’ cellular IoT business. The division offers a range of modules, gateways and modem cards. Sold under the Cinterion brand, they support 5G, LTE, NB-IoT and LTE-M, as well as GPS and GLONASS positioning technologies. It boasts 550 employees spread across 23 countries, and last year it turned over €300 million.
The deal with Telit – which is due to close in Q4 subject to all the usual terms and conditions – will create Telit Cinterion, expanding Telit’s presence in several industrial IoT verticals and various end markets including payment systems, energy, e-health, and security. Thanks to Thales’ defence and security heritage, the acquisition will also provide Telit with the ability to offer cyber-secure cellular IoT modules. Telit said it wants the new division to focus primarily on industrial IoT, and so with that in mind, it plans to spin off its automotive IoT division into a separate unit once the deal closes.
“This transaction with Thales is arguably the most impactful one for Telit competitiveness. While it will boost our ability to address customer needs more precisely from a richer portfolio, it will also enable us to deliver all new offerings derived from the experience, expertise, and the DNA of two companies that have made security and quality part of their brand promise from the very beginning,” said Telit CEO Paolo Dal Pino, in a statement last Friday.
“The Thales and Telit combination brings together complementary strengths. The business will provide a unique value proposition in a highly competitive global IoT market and will allow Thales to focus its investments on its three core activities in aerospace, defence and security, and digital identity and security,” added Philippe Vallée, EVP of digital identity and security at Thales. “The new combination will rely on a unique set of expertise brought by Thales and Telit employees. It will also benefit from leveraging both companies’ strong and complementary product portfolio and Thales’ experience in cellular connectivity.”
Financial terms of the transaction were not disclosed, but the companies did reveal that Thales will take a 25 percent stake in the new entity, which will be managed by Telit execs.
While Telit has always been a fairly acquisitive company, in recent years it has been the one subject to approaches from potential buyers. In late 2020, amid interest from several suitors, Swiss IoT logistics company U-blox made a move for Telit, but the latter didn’t like the terms on offer and the deal fell apart in January 2021. In May of that same year, UK-based private equity firm Dbay Advisors agreed to acquire Telit in a deal valuing the company at £320 million. The transaction closed in September, at which point Telit de-listed from the London Stock Exchange.
This consolidation all points to IoT players trying to scale up in anticipation of mass adoption. Analyst firm Transforma Insights predicted last week that global IoT connections are expected to more than double between now and the end of the decade, from 13.1 billion to 29.4 billion. In revenue terms, it expects the market to be worth $621 billion in 2030, compared to $213 billion in 2021.
If there really is that much headroom still left in the IoT market, it is little wonder Telit is keen to bulk up.