Motorola Solutions Inc (NYSE:MSI), a company distinct from Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) business Motorola Mobility, is selling its enterprise arm to Zebra. The news was initially reported by Michael Calia over at The Wall Street Journal. According to that source, Zebra Technologies Corp. (NASDAQ:ZBRA) will pay $3.45 billion for the business.
The deal is worth the entirety of the market capitalization of Zebra Technologies Corp. (NASDAQ:ZBRA) as of Monday’s close. The barcode printing company will also see its patent portfolio expand considerably as a result of the deal, according to the WSJ. In pre-market trading on Tuesday shares in Zebra were trading up by more than 5% as a result of the news.
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Motorola Solutions discards excess weight
Motorola Solutions Inc (NYSE:MSI) is the result of the spinoff of Motorola Mobility from Motorola in 2011. The company has been seeking to narrow its focus, and discarding its enterprise arm will help it to achieve that purpose. The company, which is concentrating its efforts on government and public safety communications projects, a business it says holds the most value going forward.
The company’s Chairman Greg Brown said that the company would “return the proceeds to our shareholders in a timely fashion.” The deal is expected to close before the end of the year, and it is not expected to be met with major resistance from any government agency.
This morning the deal has been judged a positive for both companies. Motorola Solutions Inc (NYSE:MSI) earnings have been revised upwards as the company gets to concentrate on what it deems its core business while Zebra expands massively into a business it is already practiced in. Shares in Motorola Solutions jumped by close to 3% in pre-market trading.
Zebra gunning for enterprise market
Chief Executive Anders Gustafsson, who has been at Zebra Technologies Corp. (NASDAQ:ZBRA) since Novemebr 2007, said that the “acquisition will transform Zebra into a leading provider of solutions that deliver greater intelligence and insights into our customers’ enterprises and extended value chains.”
The company is expecting big things from its new enterprise business, as is the market, assuming this morning’s 5% jump in value is a mark of approval.
The business that Zebra Technologies Corp. (NASDAQ:ZBRA) bought today works on its own bar code scanning business and provides other equipment for uses in stores. The patents moving in the deal are expected to add to Zebra earnings immediately adding to the value of the deal in the short term. According to the terms of the acquisition around 4,500 patents will be moved between the companies along with 4,500 employees.
Zebra Technologies Corp. (NASDAQ:ZBRA) will have to finance the deal with a hefty amount of debt. According to a release from the company, it plans to take on around $3.25 billion in debt in order to finance the deal.