ARRIS TO ACQUIRE MOTOROLA HOME BUSINESS

  • ARRIS Group
  • Google
SUWANEE, GA and MOUNTAIN VIEW, CAARRIS Group, Inc., a global innovator in broadband media technology, and Google today jointly announced that ARRIS and Motorola Mobility, a Google subsidiary, have entered into a definitive agreement under which ARRIS will acquire the Motorola Home business from Motorola Mobility, for $2.35 billion in a cash-and-stock transaction approved by the Boards of Directors of both companies. The acquisition will be on a cash-free, debt-free basis and is expected to be significantly accretive to ARRIS’ non-GAAP earnings starting in the first full year after closing.

Under the terms of the agreement, upon closing of the transaction, Google will receive $2.05 billion in cash and approximately $300 million in newly issued ARRIS shares, subject to certain adjustments provided for in the agreement, representing an approximately 15.7 percent ownership interest in ARRIS post-closing.

The Motorola Home business is best known for Motorola's set-top boxes, but it also includes the popular Passive Optical LAN solution, a fiber-based replacement for enterprise LANs. In addition, Motorola Home includes a GPON line of fiber-to-the-home equipment that is no longer actively marketed. Though Motorola supplied much of the FTTH gear for Verizon and several other operators, its equipment is no longer used in new deployments, and the company's FTTH customers were reportedly notified several years ago to seek alternative suppliers.

Opportunities for ARRIS
ARRIS says that acquiring Motorola Home will enhance its ability to provide next-generation consumer video products and services, supporting a more comprehensive product offering while also accelerating its ability to deliver a comprehensive set of new products for broadband to a wide spectrum of customers. The transaction will increase ARRIS’ patent portfolio and provide a license to a wide array of Motorola Mobility patents.

Together, ARRIS and Motorola Home will have a global presence with over 500 customers in 70 countries, more than tripling ARRIS pro forma combined revenue to approximately $4.7 billion for the trailing four quarter period ended September 30, 2012. The combined entity will offer a wide array of products and solutions and will have an expanded customer base encompassing the full spectrum of broadband content and service providers.

Motorola Home is a profitable business that generated revenues of $3.4 billion for the trailing four quarters ended September 30, 2012. The combination is expected to generate approximately $100 to $125 million in annual cost synergies.

The transaction is expected to close by the second quarter of 2013, subject to customary approvals and closing conditions.

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