NASDAQ-listed barcode printer marker Zebra Technologies has entered into a definitive agreement to acquire Motorola Solutions’ enterprise business for $3.45 billion in an all-cash transaction.
Zebra is financing the deal with $200 million of cash and $3.25 billion in debt and the deal is expected to be completed by end of 2014. Interestingly, this debt is almost as much as Zebra itself is worth, as indicated by The Independent. The company had a market cap of $3.43 million at market close day before and had a market cap of $3.22 billion at market close yesterday.
What’s also noteworthy is Zebra is much smaller than Motorola Solutions itself: it reported annual sales of $1 billion for 2013, while Motorola Solutions reported annual sales of $2.5 billion for the year (excluding the sales of Motorola solutions’ iDen products). Both the companies offer barcode scanning and RFID solutions to enterprises allowing them to control inventory in areas like retail, logistics, transportation and manufacturing.
Zebra’s gain: Zebra Technologies was affected by constant shift in technology – especially by cheap generic printers which allowed easy generation of barcodes. With this acquisition, Zebra Technologies gets Motorola Solutions’ mobile computing capabilities to develop enterprise products in the “Internet of Things” segment by combining these capabilities with its barcode and enterprise printing, asset tracking and Internet of Things (IoT) solutions.
It’s worth noting that Zebra Technologies had acquired Zatar, which works around devices and sensors connected to the Internet last year, following which it had launched a cloud-based Internet of Things platform and had recently expanded it to support Apple’s iBeacon-based Location Services. It had also acquired Hart Systems for around $94 million in December last year for the latter’s cloud-based inventory management solutions.
What’s left of Motorola: Post acquisition, Motorola Solutions is now left only with its government services unit and iDEN product portfolio, a leftover part of the enterprise business segment.
Remember that Motorola had split the company into two by spinning off its mobile phone business as Motorola Mobility in January 2011. This was later acquired by Google for $12.5 billion in August 2011, who sold off Motorola Home to Arris Group for $2.2 billion cash and 10.6 million Arris shares in April last year and parts of Motorola Mobility to Lenovo for $2.9 billion.