Motorola Said Near $1.3 Billion Sale of Unit to Nokia Siemens
Jul 19, 2010 at 3:34 pm in News by LT Writer
Motorola Inc. is near a deal to sell its wireless-network equipment business to Nokia Siemens Networks for more than $1.3 billion, according to one person familiar with the sale.
The sale may be announced as early as today, according to the person who wouldn’t agree to be identified because the deal hasn’t yet been made public. The final price is expected to be between $1.3 billion and $1.4 billion, the person said. Jennifer Erickson, a spokeswoman for Motorola, declined to comment.
Nokia Siemens Networks, a joint venture between Finland’s Nokia Oyj and Munich-based Siemens AG, wants to boost its presence in North America to compete with larger rival Ericsson AB and faster-growing competitors such as China’s Huawei Technologies Co. Nokia Siemens unsuccessfully bid twice for assets belonging to Toronto-based Nortel Networks Corp. during the past year after the telecom-equipment maker filed for bankruptcy protection and sold off units.
Nokia Siemens has been cutting jobs and shutting offices to adjust to falling demand and price competition from Ericsson and Huawei. Nokia Siemens Chief Executive Officer Rajeev Suri in November said the company will expand through acquisitions and partnerships while trimming its existing operations.
A Nokia Siemens spokesman didn’t immediately return phone calls seeking comment.
Over the past decade, telecom-equipment companies have combined to cope with declines in spending by some customers. France’s Alcatel SA acquired Lucent Technologies Inc. in 2006 to create Alcatel-Lucent, a Paris-based rival to Nokia Siemens. Since that deal closed, the stock has declined 52 percent.
Spinoff
Motorola is negotiating to sell the wireless-network unit as it prepares for a broader restructuring. The company is planning to spin off its mobile-phone and set-top box operations into a company that will be led by co-Chief Executive Officer Sanjay Jha. The spinoff is on track for the first quarter, Jha said last month.
Sales from the wireless networks business fell 7 percent to $896 million last quarter from a year earlier, accounting for 18 percent of Motorola’s total revenue. The division’s operating profit climbed to $112 million from $62 million a year earlier, helped by contracts it won from companies including China Mobile Communications Corp.
If a wireless-network sale goes ahead, it would leave Greg Brown, the other co-CEO at the Schaumburg, Illinois-based company, responsible for just the enterprise mobility business that makes two-way radios and bar-code scanners. Brown said in April that a sale of the networking business was possible.
“If there is an alternate equation or partnership that improves that trajectory even further than what we think, we’d consider it,” he said.
Nokia Siemens is being represented by Barclays Capital, while Motorola is being advised by Centerview Partners, JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to people familiar with the discussions.
Source: Bloomberg
