Tags: Silver Lake | Motorola Solutions | walkie-talkies | radio

Silver Lake Bets $1 Billion on Motorola Solutions

Wednesday, 05 Aug 2015 06:03 AM

Motorola Solutions Inc. said private equity firm Silver Lake would invest $1 billion in the maker of walkie-talkies and radio systems as it looks to boost growth in its services business, which includes video monitoring and data analytics.

Motorola Solutions, whose shares were up 5 percent in premarket trading, also said it planned a $2 billion buyback.

The investment is one of the largest ever by Silver Lake, which led a $24.9 billion deal to take Dell Inc. private in 2013.

The private equity firm will buy $1 billion of convertible senior notes due 2020 with an initial conversion price of $68.50 per share, Motorola Solutions said on Wednesday.

Silver Lake will also get two board seats when the deal closes. The board currently has eight members.

Motorola Solutions said it expected the investment to boost its business that includes video monitoring, data analytics and content management for "smart policing".

The business accounted for 3 percent net sales of the company's services unit, which in turn represented 35 percent of overall net sales in 2014.

"It shows Silver Lake does value MSI as a great strategic asset, not the ex-growth declining assets some observers described recently," Bernstein analyst Pierre Ferragu said.

Raymond James analyst Travis McCourt said the funds from Silver Lake could also be used to make strategic acquisitions.

Motorola Solutions — unrelated to cellphone and set-top box maker Motorola Mobility, now owned by China's Lenovo — has been cutting costs aggressively in the face of sluggish sales.

The company's major customers include police and fire departments as well as other government agencies whose budgets have been squeezed in recent years.

Bloomberg reported in April that the company had failed to find a buyer after putting itself up for sale.

Goldman Sachs & Co. and J.P. Morgan are financial advisers to Motorola Solutions, while Wachtell, Lipton, Rosen & Katz was legal adviser. DBO Partners was financial adviser to Silver Lake, and Simpson Thacher & Bartlett was its legal adviser.

Motorola Solutions' net sales fell 1.8 percent to $1.37 billion in the second quarter ended July 4.

Net income attributable to the company fell to $142 million, or 68 cents per share, from $824 million, or $3.22 per share, reflecting the divestiture of the company's enterprise business in October. Net income from continuing operations rose to 72 cents per share from 30.

Up to Tuesday's close of $60.22, the company's shares had fallen about 10 percent this year.

© 2017 Thomson/Reuters. All rights reserved.

   
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Motorola Solutions Inc. said private equity firm Silver Lake would invest $1 billion in the maker of walkie-talkies and radio systems as it looks to boost growth in its services business, which includes video monitoring and data analytics.
Silver Lake, Motorola Solutions, walkie-talkies, radio
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2015-03-05
Wednesday, 05 Aug 2015 06:03 AM
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