SCHAUMBURG, Ill.—The Inc. is laying down the ink—and nearly $4 billion in cash—to bulk up for the enterprise.
Motorola Inc. and Symbol Technologies announced that the former would buy the latter for nearly $4 billion, a move deepening Motorola’s position in enterprise mobility and related markets. Specifically, the purchase brings Symbol’s corporate clients such as Proctor & Gamble, IBM Corp., AT&T Inc., Wal-Mart Stores Inc. and United Parcel Service into Motorola’s stable, jump-starting Moto’s ongoing efforts to become part of the fabric of large enterprises.
The approximate purchase price is based on an offer of $15 per share. The transaction is subject to shareholder approval at both companies, and regulatory approval and is expected by late this year or early next year, according to the news release issued by both firms.
Motorola’s shares rose slightly in early trading after the news before settling down to $24.65 per share at midday, down a little more than 1 percent from its opening value. Symbol Technologies’ stock rose a fraction of a percent to $14.70 per share by midday.
Symbol specializes in the design, manufacture and service of products and systems used in enterprise applications. The company already has expertise and a strong position in vertical industries including retail, travel and transportation, manufacturing, wholesale and distribution. For example, it makes scanners and RFID tags that already have many uses in industrial and consumer settings. The company holds significant intellectual property as well, including more than 900 patents. Motorola told analysts in July that owning the intellectual property at the core of its technologies is crucial to its ability to innovate and profit in the marketplace.
Although the deal boosts Motorola’s enterprise position, it could weigh on the company’s margins. The Schaumburg, Ill.-based vendor continues to rely on the sale of handsets to consumers for the bulk of its revenue and earnings. The consumer market offers healthier margins in a shorter timeframe, according to Albert Lin, an analyst with American Technology Research.
“I don’t think investors would be pleased in seeing Motorola move into any areas where margins may drop,” Lin said.
Motorola’s strategy for achieving “seamless mobility”—a phrase that invokes the company’s vision for delivering entertainment and business information at home, on the run or in the enterprise—will be enhanced by the purchase, according to Ed Zander, Motorola’s chief executive officer.
Upon completing the transaction, Symbol will become a wholly owned subsidiary of Motorola and the “cornerstone” of Motorola’s networks and enterprise division, which will be based in Symbol’s existing headquarters in Holtsville, N.Y.
Motorola had sales of about $35 billion last year and has stockpiled $10 billion in cash for strategic acquisitions such as the purchase of Symbol.
