By Michael Calia
Zebra Technologies Corp. (ZBRA) on Tuesday made a bid to
substantially grow its business, agreeing to buy Motorola Solutions
Inc.'s (MSI) enterprise business for $3.45 billion in cash.
Shares of Zebra, which also raised its first-quarter guidance,
jumped 5.5% to $72 in recent premarket trading. Shares of Motorola
Solutions, which cut its revenue view for the period, rose 3.5% to
$66.01.
The deal, expected to close by the end of the year, represents a
large expansion for Zebra as the barcode-printing and
asset-tracking company looks to strengthen its presence in retail,
logistics, transportation and manufacturing, while broadening its
geographic reach to more than 100 countries.
Zebra expects the deal--which would broaden the company's patent
portfolio to about 4,500--to immediately add to earnings.
"This acquisition will transform Zebra into a leading provider
of solutions that deliver greater intelligence and insights into
our customers' enterprises and extended value chains," Zebra Chief
Executive Anders Gustafsson said. "The enterprise business will
generate significant value for our shareholders by driving further
product innovation and deeper engagement with our customers and
partners."
The deal does not include Motorola Solutions' iDEN product
portfolio, which enables wireless communications among work groups
over large geographical areas.
Motorola Solutions's enterprise business--which produces barcode
scanners and multimedia kiosks for stores, among other
products--had pro forma revenue of $2.5 billion last year excluding
iDEN sales, nearly a third of the company's top line, while Zebra
had $1 billion in sales, the companies said. Zebra--which intends
to finance a large chunk of the deal with $3.25 billion in
debt--also expects to add about 4,500 employees after the deal is
completed.
Motorola Solutions became a stand-alone business in 2011 after
splitting from Motorola Mobility Inc., which was later bought by
Google Inc. for $12.5 billion. The company said a strategic review
last year showed that there was more value in focusing solely on
its government and public safety communications operations.
"This transaction will enable us to further sharpen our
strategic focus on providing mission-critical solutions for our
government and public safety customers," Motorola Solutions
Chairman and CEO Greg Brown said. "Upon closing of the transaction,
we intend to return the proceeds to our shareholders in a timely
fashion."
Motorola Solutions separately said it lowered its revenue
forecast for the first quarter because of soft demand in its North
American government business, along with enterprise sales that came
in under expectations. The company now sees a top line of about
$1.8 billion, down about $500 million from the low end of its
previous guidance.
Zebra, likewise, raised its guidance for the first quarter,
saying it expects per-share profit of 88 cents to 91 cents,
excluding nine cents a share in acquisition expenses, and $287
million to $289 million in revenue. The company had previously
projected a range of 77 cents a share to 87 cents a share in
earnings and $276 million to $286 million in revenue.
Write to Michael Calia at michael.calia@wsj.com
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