In yet another major tech deal barcode printer maker Zebra Technologies Corp. (NASDAQ:ZBRA) agreed to purchase Motorola Solutions Inc.’s (NYSE:MSI) enterprise business for $3.45 billion in an all-cash transaction, the companies announced in a joint statement on Tuesday.
The deal, which was approved by the Boards of Directors of both companies, is liable to customary closing conditions comprising regulatory approvals. The transaction is expected to be completed by the end of 2014 and once that is done, around 4,500 Motorola staff members are expected to join Zebra Technologies Corp, which is based in Lincolnshire, Ill.
Zebra Tech, with 2013 sales of $1.0 billion is a leader in barcode and enterprise printing, asset tracking, Internet of Things (IoT) solutions, motion and location sensing. With the conjunction of these technology offerings and asset tracking solutions along with Motorola’s Enterprise business, an industry leader will be created in enterprise asset intelligence for the connected age.
The company issued a statement stating that the buyout will be funded through a combination of cash on hand and new debt. The acquisition will be financed with nearly $200 million of available cash on hand and the rest $3.25 billion will be funded via a new credit facility and the issuance of debt securities. Its debt level is said to rise from zero to nearly five times its adjusted yearly profit. The deal is said to help the company to expand into key industries like retail, transportation, logistics and manufacturing that will serve approximately 95% of the Fortune 500.
Anders Gustafsson, Zebra’s CEO, said in a statement that the enterprise business will beget extensive value for the shareholders by driving further product innovation and deeper engagement with their customers and partners. It places Zebra as a leading technology innovator with the accelerating convergence of mobility, data analytics and cloud computing.
The combined business of Zebra and Motorola Solutions is expected to have about 20,000 channel partners in more than 100 countries that will hold a sturdy portfolio of intellectual property with approximately 4,500 U.S. and international patents issued and pending.
Motorola's iDEN products portfolio was not part of the sale, and Motorola Solutions will continue to produce and design its voice and data communication solutions for government and public safety business including its professional commercial radio product portfolio. The company became a standalone business in 2011, had revenues of $2.5 billion last year (excluding sales of iDEN products). Zebra at present employs 2,544 people while Motorola Solutions has around 21,000 employees.