The Strategist

Motorola Solutions is Getting Ready for a Shopping Worth $ 1.6 Billion


08/20/2015 - 14:25



American manufacturer of communications Motorola Solutions plans to acquire the British service provider Airwave Solutions. The deal amounted to 1 billion pounds, or $ 1.6 billion.



Justin Ormont Eva Lee
Justin Ormont Eva Lee
The information that companies are at the stage of negotiations was reported by Reuters news agency, citing an anonymous source familiar with the situation. Negotiations between Motorola and Airwave are on a high stage, but the failure of the transaction is not excluded, partly because of the complicated shareholder structure of the British company.

Purchasing Airwave should help strengthen Motorola’s service business, as the company specializes in providing communication services to British fire guards, ambulance and police. Airwave had been founded by telecommunications provider Telefonica UK in 2000. In 2007, the company was bought by investment funds, members of the Australian holding company Macquarie Group, for 1.9 billion pounds ($ 3 billion).

In early August, Motorola Solutions has attracted investment of $ 1 billion, as evidenced by the data of the newspaper The New York Times. The publication writes that the company failed to find a buyer, but instead, Motorola Solutions has raised $ 1 billion from private equity fund Silver Lake, which allowed American vendor to focus on the development once again.

The company intends to use the funds to accelerate the development of "smart" solutions for public safety, as well as services for businesses by creating new partnerships, investments and acquisitions. Prior to that, it was selling the equipment only for the firefighters and police officers.

Financing of Motorola Solutions is carried out on the model PIPE (private investment in a public company) in the form of debt that can be converted into ordinary shares. The conversion price of securities, mentioned in the agreement, is $ 68.5 per share, which is 30% higher than the average share price of Motorola Solutions for the 30-day period ending August 4.

Under the agreement, two top managers Silver Lake - Egon Durban and Greg Mondre - will join the board of directors of Motorola Solutions. The transaction is expected to be closed in the III quarter of 2015.

BACKGROUND

Motorola Solutions was launched in 2011 following the division of the corporation Motorola. As we remember, the business of manufacturing mobile gadgets - Motorola Mobility - was first sold to its compatriot - Google, and then the asset was bought by the Chinese Lenovo.

Today, Motorola Solutions is a independent company, which recently fallen on hard times. The company's revenues in 2014 decreased by 6% to $ 5.88 billion due to weak demand for telecom equipment. The vendor’s operating profit declined by 45%. In 2015, Motorola Solutions expects zero growth in revenue at best, and at worst - falling by 2%.

In II quarter 2015, Motorola Solutions predicts the drop in sales of 3-5% compared to last year. The company has become more dependent on government clients, after in 2014 sold its corporate business to Zebra Technologies company. Motorola Solutions has more than 100 ths. clients in 100 countries; among its customers are local, regional and state agencies of public safety, as well as utilities, mining and transport companies.

source: reuters.com




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