Zebra Technologies Corp. will buy Illinois-based Motorola Solutions Inc.'s enterprise business for $3.45 billion in a move to complement Zebra's already established bar code printer making business, the companies said Tuesday.
The deal, which has been approved by both companies' boards of directors, is expected to be completed by the end of 2014. It sees Zebra acquiring an enterprise business that generated sales of about $2.5 billion in 2013 alone.
Zebra CEO Anders Gustafsson said that the addition of Motorola's enterprise business will help position Zebra as a leader in the tech sector, especially in the fields of mobility, data analytics and cloud computing.
"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," Gustafsson said in a statement. "The enterprise business will generate significant value for our shareholders by driving further product innovation and deeper engagement with our customers and partners."
Motorola Chairman and CEO Greg Brown called Motorola's enterprise business an ideal fit for Zebra. Brown also said that the decision to sell the enterprise business came after a review of its strategy concluded that the company was better off with a more specific focus.
"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 and public safety business," Brown said. "This transaction will enable us to further sharpen our strategic focus on providing mission-critical solutions for our government and public safety customers."
Brown also noted that upon the deal's closing, the company plans to return the proceeds to its shareholders "in a timely fashion."
Zebra said that it will fund the deal using a combination of cash on hand and new debt and that it expects the transaction to be immediately accretive to the company's earnings.
The company added that the acquisition of the Motorola enterprise business, which will see Zebra taking on 4,500 employees, will significantly expand its geographical reach, as the combined company will operate in more than 100 countries.
Motorola is represented by Winston & Strawn LLP. The Motorola board of directors are represented by David C. Karp and Viktor Sapezhnikov of Wachtell Lipton Rosen & Katz. Goldman Sachs & Co. and LP Morgan Securities LLC are serving as financial advisers.
Zebra is represented by Kirkland & Ellis LLP. Morgan Stanley is serving as financial adviser.
REPRINTED WITH PERMISSION FROM THE APRIL 15, 2014 EDITION OF LAW360 © 2014 PORTFOLIO MEDIA INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED