Arris acquires Google’s Motorola Home for $2.35bn

Larry Page, chief executive officer at Google Inc.

Larry Page, chief executive officer at Google Inc.

At last it happened. Google Inc. decided ultimately to sell its Motorola Home business. The American multinational corporation announced that it reached an agreement to sell the Motorola Home business to Arris Group Inc. for as much as $2.35 billion. The step has been taken as Google Inc. wants to fully concentrate on expanding its smartphone business and engaging in the global competition in the growing mobile devices market.

Acquisition of Motorola Home

According to the announcement, Arris Group Inc. agreed to purchase the Motorola set-top business for $2.35 billion in cash and stock. Under terms of the deal, the U.S. networking equipment maker will pay as much as $2.05 billion in cash and roughly $300 million in new shares, leaving Google Inc. with a stake of approximately 16 percent. To acquire the TV set-top business Arris Group Inc. will have to borrow over $2 billion.

As it was underlined by Arris Group Inc., the purchase of Motorola Home business is expected to be accretive to its non-GAAP earnings in the first full fiscal year after the finalization of the agreement. The company’s estimates indicate that the acquisition of Motorola Home business is to triple the cable-equipment maker’s pro forma revenue for the trailing four quarters ended September as the acquired division generated revenues of almost 3.5 billion in the period. In addition, annual cost synergy will range from $100 million to $125 million.

It is worth mentioning that the sale of the Motorola Home business generated great interest. Buyers saw potential in the division as they believed that the acquisition would be a way to enter rankings of main suppliers to cable and telecommunication companies. According to a source familiar with the matter, Google Inc. received many offers for the Motorola Home business.

The acquisition of the Motorola Home business is expected to be finalized by the end of the second quarter of 2013.

Google gets rid of Motorola Home

After only few months since the acquisition as Google Inc. bought Motorola Mobility Holdings Inc. for as much as $12.5 billion back in May 2012, the company decided to sell its Motorola Home business. Even though the company was initially interested in the market for TV-connected devices and it even released the Nexus Q, it quickly backed out of its plans as the product received poor reviews. Officials of Google Inc. explained the decision to get rid of the division by underlining the importance of “technology transformation.”

But some analysts are convinced that Google Inc’s decision to sell Motorola Home business is natural as the company was never interested in that division at all. The acquisition of Motorola Mobility Holdings Inc. including its Motorola Home division was aimed at gaining more mobile patents. That was the main purpose of the acquisition.

Google Inc. decided to sell its Motorola Home business when the division stopped being useful for the American multinational company. These days Google Inc. is focused on its mobile devices including smartphones as the competition with Apple Inc. is sharpening and accelerating at the same time.

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Aubrey Chang
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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