Zebra Technologies Corp., a provider of bar code, RFID and real-time location solutions, has acquired Motorola Solutions’ Enterprise business for $3.45 billion in what is being described as an “all-cash transaction.” It’s actually a combination of cash on hand (roughly $200 million) and new debt (roughly $3.25 billion). Given that Zebra’s annual sales in 2013 were $1 billion, the company is taking something of a leap of faith that adding Motorola’s data capture communication technologies to its product line will pay off quickly.
Motorola’s Enterprise business had sales of roughly $2.5 billion in 2013, so the acquisition is a textbook case of a smaller company buying up a division of a larger company, prompting the question: Why did Motorola decide to divest its Enterprise business? “Last year, we undertook a thorough review of our strategy and concluded that the synergies between our Government and Enterprise businesses were not as great as the value we could create by being singularly focused on our core Government & Public Safety business,” explains Greg Brown, Motorola Solutions’ chairman and CEO. “This transaction will enable us to further sharpen our strategic focus on providing mission-critical solutions for our government and public safety customers.”
Zebra currently employs 2,500 people, and with the acquisition of Motorola’s Enterprise business, another 4,500 employees will join the company, creating a $3.5 billion company employing 7,000.
“The Enterprise business will generate significant value for our shareholders by driving further product innovation and deeper engagement with our customers and partners,” says Anders Gustafsson, Zebra’s CEO. The combined company will focus on providing enterprise asset intelligence solutions, as it sees the marketplace converging on mobility, data analytics and cloud computing. It will have 20,000 channel partners located in more than 100 countries worldwide, with a portfolio of 4,500 U.S. and international patents issued and pending.