Horsham-based Motorola Home sold for $2.35 billion
A Georgia telecommunications equipment supplier will buy the Horsham-based Motorola Home business from Google Inc. in a cash-and-stock transaction worth $2.35 billion.
A Georgia telecommunications equipment supplier will buy the Horsham-based Motorola Home business from Google Inc. in a cash-and-stock transaction worth $2.35 billion.
Arris Group Inc. is acquiring a business that supplies equipment, including the familiar, if fading, set-top box, to Comcast Corp. and other operators in the $150 billion pay-TV industry. The combination brings together two companies under pressure to adjust to a world in which consumers increasingly watch programs on more devices than just the TV in the family room.
The deal was announced after the market closed Wednesday.
In buying Motorola Home, Arris will more than triple its annual revenue and workforce, representing "a great leap forward," said Robert J. Stanzione, chairman and chief executive officer.
Arris reported $1.3 billion in revenue for its last four quarters, while Motorola Home generated $3.4 billion in revenue as part of Motorola Mobility, which Google acquired in a $12.5 billion transaction announced in August 2011.
An Arris spokesman said about 1,000 of Motorola Home's 5,000 employees work in Horsham, one of the company's 18 locations. Arris employs about 2,100 people worldwide.
It is unclear how the transaction may affect Motorola Home's local operations, which trace their origins to Jerrold Electronics, begun in 1948 by Milton Shapp, who later became Pennsylvania's governor. The business changed names and ownership many times, landing in Motorola Inc.'s hands in 2000 when it acquired what then was called General Instrument Corp. for $17 billion.
During a conference call with analysts Wednesday evening, Arris' chief financial officer, David B. Potts, estimated yielding "annual cost synergies" of $100 million to $125 million about 12 months after the close of the deal, expected by the second quarter of 2013.
Cost synergies often involve layoffs and eliminating duplication in departments. Potts indicated that some of those savings could come from the supply chain, research and development operations, and expenses associated with sales and administration.
In response to an analyst's question about whether Arris was considering eliminating some elements of the Motorola Home business, Stanzione said, "We do not plan on exiting anything at this point. The product lines are quite complementary."
Arris will pay Google $2.05 billion in cash and about $300 million in newly issued shares of common stock. That would give the Mountain View, Calif.-based Web search and advertising giant a 15.7 percent ownership stake in Arris.
Based in Suwanee, an Atlanta suburb, Arris traces its history to two companies involved in the cable-television industry: Anixter Inc. and C-cor Inc.
Anixter got into the cable-equipment distribution business in 1969 and eventually spun off that unit, called Antec, which went public in 1993. The Arris name came from a joint venture between Antec and Nortel Networks in the mid-1990s that developed products used in telephone and data services.
Arris acquired C-cor, a developer of network equipment and advanced optical products for the cable industry that was founded in State College, Pa., in 1953, for $680 million in December 2007. Arris currently employs about 75 people in Centre County.
Shares of Arris closed at a 52-week high of $15.06, up 52 cents, or about 3.6 percent, on heavy volume. Google shares closed slightly higher, up $2.25 or 0.3 percent, to $722.36.