Motorola to pay $3.9 billion for Symbol

Oct 1, 2006 12:00 PM, By Donny Jackson

In a move designed to bolster its mobile-enterprise portfolio, Motorola has agreed to pay $3.9 billion cash to acquire Symbol Technologies, a leader in the radio frequency identification (RFID), VoIP, wireless LAN and data-capure-technology markets.

“It really ties into seamless mobility; it's a dead-on hit on what our strategy's about,” Motorola Chairman and CEO Ed Zander said in an analyst conference call to announce the deal. “We wanted to be front and center in this space. In more ways than one, Symbol gives us that.”

Greg Brown, president of Motorola's Networks and Enterprise business unit, echoed this sentiment, noting that Symbol's Holtsville, N.Y., headquarters will be the cornerstone of Motorola's enterprise business. With more than 1600 U.S. and international patents in its portfolio, Symbol's expertise in wireless technologies inside buildings fits well with Motorola's wide-area networking capabilities to give the company an “unprecedented” portfolio in the enterprise space, he said.

“Symbol is our ideal partner,” Brown said. “By combining our complementary strengths, assets and expertise, we're staking a clear claim on enterprise mobility today.”

The complementary nature of the two companies is evident in other ways, said John DeFeo, corporate vice president of enterprise products in Motorola's enterprise mobility solutions group. For instance, Motorola has been successful in the smart-phone market, while Symbol is a leader in the ruggedized computing device arena, he said.

“Once the transaction is consummated, what we'll have is a truly unique portfolio that spans from the white-collar, carpeted, mobile office space to the most demanding, ruggedized, weather-hardened devices for heavy industry,” DeFeo said. “And it is absolutely our intention to move those products through all of the available distribution channels and market segments that we serve, like the service providers, the government and perhaps into the consumer space.”

Still subject to customary regulatory and Symbol stockholder approval, the acquisition is the second-largest in the history of Motorola and the largest cash deal in its history, said Marc Rothman, senior vice president of finance and business development in Motorola's Networks and Enterprise unit. The merger is expected to close late this year or early in 2007, when Symbol will become a wholly owned subsidiary of Motorola.

“What we also love about these guys is that they bring incredible distribution capabilities,” Rothman said, noting that Symbol is “exponentially larger” than Motorola in every enterprise category. “They're 12,000 rich in terms of partners and have a very nice direct sales force. It very much takes us to the next level in terms of our enterprise play.”

Symbol Technologies President and CEO Sal Iannuzzi, who staunchly denied media reports that the company conducted an auction for its assets, will remain with the company after the merger and report directly to Brown.

Motorola's focus on the mobile enterprise market is a wise strategy, especially because the space already is lucrative but is nascent enough to grow substantially for several years, Yankee Group Wireless Analyst John Jackson said.

“The enterprise customer is a priority target for service providers worldwide, because they tend to have the wherewithal to pay a lot of money — that's what Nextel has taught us,” Jackson said. “And they tend to require highly specialized devices that cost more to build, cost more to develop and require alternate channels to market.”