Ending a healthy spat of rumor and speculation, Motorola has confirmed today that it'll be splitting into two separate entities as of the first quarter of next year. The first of the two will form from the current Mobile Devices and Home businesses -- led by Sanjay Jha effective immediately -- with control of the phone business, set-top boxes, and "end-to-end video, voice and data solutions," while the other half will congeal out of the Enterprise Mobility and Networks divisions that are responsible for wireless infrastructure, two-way radios, public safety systems, and the like, and that will be led by Greg Brown (in other words, both businesses will retain their current leaders). The deal apparently has the support of Moto's board (a good thing to have when you're a publicly-traded company), and logically, both spin-offs will be publicly-traded as well.
Here's where it gets interesting: the Mobile Devices and Home business will own the Motorola brand and license it, royalty-free, to the other company. Presumably this would be a perpetual license, but we don't have details there yet. In the meantime, Old Moto (as we'll call it for now) expects to follow through on the plan using a "tax-free stock dividend of shares in the new company to Motorola shareholders" with the understanding that both businesses will be "well capitalized" so that they "can execute their respective business plans and be able to address future opportunities." Follow the break for Motorola's official press release detailing the schism.
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SCHAUMBURG, Ill., February 11, 2010 – Motorola, Inc. (NYSE: MOT) today announced the Company is targeting the first quarter of 2011 for its planned separation. Motorola intends to separate into two independent, publicly-traded companies. One will include the Company's Mobile Devices and Home businesses, and the other will include its Enterprise Mobility Solutions and Networks businesses.
Dr. Sanjay Jha, co-chief executive officer of Motorola, Inc., will serve as chief executive officer of Motorola's Mobile Devices and Home businesses effective immediately. This business will offer a comprehensive portfolio of mobile converged devices, digital entertainment devices in the home, and end-to-end video, voice and data solutions. Working with network operator partners, the company will also enable more advanced personalized services that leverage the capability of expanding wireless and wireline broadband availability.
Dr. Jha said, "The combination of Mobile Devices and our Home business brings together two highly complementary and innovative organizations. Together we will be best positioned to lead in the convergence of mobility, media, and the Internet. Our expanding portfolio of smartphones and end-to-end video content delivery capabilities will enable us to provide advanced mobile media solutions and multi-screen experiences for our customers."
Greg Brown, co-chief executive officer of Motorola, Inc., will serve as chief executive officer of Motorola's Enterprise Mobility Solutions and Networks businesses effective immediately. This business will offer a comprehensive end-to-end portfolio of products and solutions, including rugged two-way radios, mobile computers, secure public safety systems, scanning, RFID, and wireless network infrastructure.
Mr. Brown said, "We are the leading mission-and business-critical technology solutions provider with a commitment to innovation. As an independent company, we will continue to build on our long-standing tradition of strong customer relationships, leading-edge product development, quality, thought leadership, and solid financial performance."
"The board of directors supports the planned separation of Motorola into two industry-leading public companies," said David Dorman, chairman of Motorola's Board of Directors. "We believe this structure provides significant operational and strategic flexibility for both companies, positions them for future success, and enhances long-term shareholder value."
Completing the Separation
Motorola intends to effect the separation through a tax-free stock dividend of shares in the new company to Motorola shareholders. Following the separation both businesses will be well capitalized so the companies can execute their respective business plans and be able to address future opportunities. Motorola expects that, post-separation, the Enterprise Mobility and Networks business will be capitalized in a manner that will achieve an investment grade rating and will be the entity responsible for Motorola's existing public market debt at the time of separation.
Following the separation event both entities will use the Motorola brand. The Mobile Devices and Home business is expected to own the Motorola brand and license it royalty free to the Enterprise Mobility Solutions and Networks business. Additional details regarding brand, capital structure and which entity will be distributed will be provided in the future as we progress with our plans.
The proposed tax-free spin-off is expected to be accomplished through a pro rata distribution to Motorola shareholders. Completion of the spin-off is subject to a number of conditions, including, among others, confirmation of the tax-free nature of the transaction, as well as effectiveness of a Form 10 Registration Statement to be filed with the U.S. Securities and Exchange Commission ("SEC"). Motorola will distribute an information statement to shareholders following completion of the SEC's review of the Form 10.
The Company noted that there can be no assurance that any separation transaction will ultimately occur or, if one does occur, there can be no assurances as to its terms or timing.
Motorola is known around the world for innovation in communications and focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of US $22 billion in 2009. For more information, please visit www.motorola.com.