Motorola to Buy Symbol for $3.9 Billion
Tuesday September 19, 6:14 pm ET
By Megan Reichgott, Associated Press Writer
Motorola to Buy Symbol Technologies for $3.9 Billion
CHICAGO (AP) -- Motorola Inc. announced its biggest acquisition Tuesday in nearly seven years, agreeing to buy Symbol Technologies Inc. for $3.9 billion in a deal that boosts the cell phone maker's stake in the market for business-oriented mobile devices.
The deal for Symbol, a leader in portable bar code scanners and customized handheld computers, would add a well-established product portfolio and valuable intellectual property to Motorola, company officials said. The transaction is expected to close in late 2006 or early 2007, pending regulator clearance and approval by Symbol shareholders.
"With today's announcement, we're making a giant leap forward in the enterprise market space," Greg Brown, president of Motorola's Networks and Enterprise business, said in a conference call from Symbol's headquarters in Holtsville, N.Y.
Motorola, based in Schaumburg, Ill., said it would pay $15 per Symbol share. That's 18 percent higher than Symbol's closing price of $12.71 on Friday, before weekend news reports of an impending deal helped boost the stock to $14.67 on Monday. In Tuesday's trading on the New York Stock Exchange, Symbol rose 8 cents a share to close at $14.75 Tuesday while Motorola fell 2 cents to finish at $24.93.
Symbol also produces mobile devices for rugged business environments, as well as equipment based on the emerging wireless technology known as RFID, or radio frequency identification, which is used for inventory tracking and other purposes.
"This is a company we've been looking at for some time," Motorola Chairman and Chief Executive Ed Zander said.
Motorola intends for Symbol to become the "cornerstone" of the company's enterprise mobility business, said Symbol president and CEO Sal Iannuzzi. Symbol has about 5,200 workers, and in 2005 reported earnings of $32.3 million on sales of $1.77 billion.
Symbol also produces mobile devices for rugged business environments, as well as equipment based on the emerging wireless technology known as RFID, or radio frequency identification, which is used for inventory tracking and other purposes.
The buyout comes two years after seven former Symbol executives and its former general counsel were charged with deceiving investors by inflating earnings. The Securities and Exchange Commission also accused the company of destroying or withholding incriminating data.
Three of the men have pleaded guilty in the case and three are scheduled to be retried next year after a mistrial, according to the U.S. attorney's office for the Eastern District of New York. One has not yet gone to trial and the eighth man, former chief executive Tomo Razmilovic, was declared a fugitive by the U.S. after failing to return for an arraignment.
However, Symbol has paid fines and restitution to resolve the case and changed management: Iannuzzi took over as interim CEO in August 2005 and permanent CEO in January.
Industry analyst Lawrence M. Harris of Oppenheimer & Co. said the deal will allow Motorola to boost its market share in retail, manufacturing, transportation and logistics.
"These are areas where Motorola historically maybe has not had as large a presence and Symbol has some long-standing relationships," Harris said.
The deal is Motorola's largest since its $17 billion acquisition of cable TV box-maker General Instrument Corp. in 2000.
The merger won't affect Motorola's stock repurchase program, company officials said. In July Motorola announced it would spend $1.2 billion to buy back shares ahead of schedule and authorized a new $4.5 billion repurchase plan good for the next three years. The move allocated a sizable portion of the company's large cash reserves to its stock.
Motorola, second in the global handset market behind Finland's Nokia Corp., expects the acquisition to add to earnings per share in the first year following closing, excluding certain non-cash charges.
Motorola: motorola.com
Symbol Technologies: symbol.com
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