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Zebra Technologies to acquire Enterprise Business from Motorola Solutions for US$3.45bn
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Zebra Technologies to acquire Enterprise Business from Motorola Solutions for US$3.45bn

Posted by Jeremy CowanApril 16, 2014

Lincolnshire, and Schaumburg, Illinois, USA, April 15, 2014 — Zebra Technologies Corporation and Motorola Solutions, Inc. have definitively agreed that Zebra will acquire Motorola’s Enterprise business for US$3.45 billion in an all-cash transaction. The acquisition will be funded through a combination of cash on hand and new debt. 

The transaction, which was approved by the Boards of Directors of both companies, is subject to customary closing conditions including regulatory approvals. The transaction is expected to be completed by the end of 2014.

With 2013 pro-forma sales of approximately $2.5 billion (excluding sales of its iDEN products), Motorola’s Enterprise business is a leader in mobile computing and advanced data capture communications technologies and services. Through this transaction, Zebra will enter the segment where Motorola’s Enterprise business competes and aims to strengthen its position in key industries including retail, transportation & logistics, and manufacturing. The company will reportedly serve approximately 95% of the Fortune 500.

Zebra Technologies (NASDAQ: ZBRA), with 2013 sales of $1.0 billion, specialises in barcode and enterprise printing, asset tracking, Internet of Things (IoT) solutions, and motion and location sensing.

The combined Zebra Technologies with Motorola’s Enterprise business

The combined Zebra Technologies with Motorola’s Enterprise business would have had pro-forma sales in 2013 of approximately $3.5 billion. Approximately 4,500 employees are expected to join Zebra upon completing this transaction. Motorola Solutions will retain its iDEN product portfolio that was part of its Enterprise business and will continue its government business, including its professional commercial radio product portfolio.

Motorola Solutions (NYSE: MSI) will continue to manufacture, design, integrate and deliver industry leading voice and data communication solutions for government and public safety customers worldwide. Motorola Solutions sells these secure, mission-critical and innovative products, services and solutions with unique software designs that are the cutting edge in public safety technology.

“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,” stated Anders Gustafsson, Zebra’s chief executive officer. “The Enterprise business will generate significant value for our shareholders by driving further product innovation and deeper engagement with our customers and partners. It positions Zebra as a leading technology innovator, with the accelerating convergence of mobility, data analytics and cloud computing.”

Anders Gustafsson, CEO of Zebra Technologies

CLICK HERE to see Anders Gustafsson, chief executive officer of Zebra Technologies, discuss the purchase

“Our Enterprise business is an ideal fit for Zebra,” said Greg Brown, Motorola Solutions chairman and CEO. “This transaction will enable us to further sharpen our strategic focus on providing mission-critical solutions for our government and public safety customers. Upon closing of the transaction, we intend to return the proceeds to our shareholders in a timely fashion.”

Strategic fit for Zebra

The transaction will significantly expand Zebra’s geographic reach; the combined company will have about 20,000 channel partners in more than 100 countries, and will hold a wide portfolio of intellectual property, with approximately 4,500 U.S. and international patents issued and pending. Key benefits to Zebra and its shareholders identified by the company include:

• Stronger combined platform with multiple growth opportunities
• New and comprehensive product, technology and IP portfolio
• Leading end-to-end solutions across key industries with global reach
• Highly diversified business mix
• Creating synergies by maximizing efficiencies and scale
• Attractive growth and free cash flow profile

Strategic rationale for Motorola Solutions

Motorola’s Brown said, “Last year, we undertook a thorough review of our strategy and concluded that the synergies between our government and enterprise businesses were not as great  as the value we could create by being singularly focused on our core government & public safety business. Going forward, we will have absolute clarity of purpose and mission as we serve customers globally with our suite of mission-critical communications solutions. This business is truly distinctive in its industry leadership, strong pipeline position, long-term track record of consistent profitability and cashflow, and an array of growth opportunities.”

Transaction details

Under the agreement, Zebra will acquire the Enterprise business from Motorola Solutions in an all-cash transaction valued at $3.45 billion, which Zebra management expects to be immediately accretive on a cash earnings basis. Zebra expects to fund the transaction with approximately $200 million of cash on hand and $3.25 billion that is fully committed to be raised through a new credit facility and the issuance of debt securities. The transaction is not subject to a financing condition and is expected to be completed by the end of 2014.

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Jeremy Cowan

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