ARRIS, a broadband media infrastructure and IPTV settop box maker will acquire Google’s Motorola Home business from Motorola Mobility, for $2.35 billion in a cash-and-stock transaction. Under the terms of the agreement, Google will receive $2.05 billion in cash and approximately $300 million in newly issued ARRIS shares, representing an approximately 15.7% ownership interest in ARRIS post-closing.
The Arris Group and Pace submitted the best bids for the Motorola division that sells television set-top boxes and other equipment to cable companies, Bloomberg reported.
TechCrunch says Google sweetened Motorola’ deal by promising to cap liability in TiVo’s Billion dollar+ patent claim. TiVo claimed that Motorola is responsible for “massive production of infringing DVRs” that “dwarfs the numbers of accused products at issue in TiVo’s previous cases.” The filing also states, “TiVo’s damages claim is likely to run into the billions of dollars.” In addition to taking on the financial liability, Google will also continue to take the lead in the legal case,
Together, ARRIS and Motorola Home will have a global presence with over 500 customers in 70 countries, more than tripling ARRIS combined revenue to approximately $4.7 billion for the trailing four quarter period ended September 30, 2012. The combined entity will offer a wide array of products and solutions and will have an expanded customer base encompassing the full spectrum of broadband content and service providers.
Motorola Home is a profitable business that generated revenues of $3.4 billion for the trailing four quarters ended September 30, 2012. The combination is expected to generate approximately $100 – $125 million in annual cost synergies.
Google has apparently been shopping the business for several months and had reportedly hired Barclays to fetch a price of $2 billion for the unit, which makes set-top boxes used by cable providers to deliver video. Apparently
Motorola’s cable settop business didn’t have much overlap with the Web giant’s Google TV initiative.
Google bought Motorola Home for $12.5bn, mostly for its large patent portfolio. Offloading the Home section also gets rid of a lot of manufacturing facilities.