Motorola Sells Home Automation Group: What Will Verizon Do?
Google sells Motorola Home, the cable settop box division of Motorola Mobility, to Arris. What will become of the 4Home home automation platform that powers Verizon Home Monitoring and Control?
Motorola Mobility Inc. (NYSE: MMI), a unit of Google, has sold its Motorola Home group to Arris, a cable infrastructure giant.
While the $2.35 billion cash/stock deal is ostensibly about Motorola’s settop box business, Arris also inherits Motorola’s fledgling home automation business.
Verizon is the only major service provider to adopt 4Home, a cloud-based home automation platform that allows users to remotely monitor and control surveillance cameras and Z-Wave-enabled wireless devices such as thermostats, lights and door locks.
The solution competes with iControl, which powers competitive offerings from ADT (Pulse), Comcast/Xfinity, Time Warner Cable and other cable providers. It also competes with AT&T’s new Digital Life service, as well as solutions from Honeywell and other security service providers.
While Motorola would not provide specific details on the future of 4Home, a spokesperson tells us that “Motorola Home acquired 4Home two years ago. So, 4Home has been fully integrated into the Motorola Home business for quite some time now. ARRIS acquired all of Motorola Home.”
Arris hints at “home management” in its presentation announcing the acquisition of Motorola Home.
Arris to Acquire Motorola Home Business for $2.3 Billion in Cash and Stock
Transformative Combination Creates Global Player In Innovative End-To-End Broadband Video Solutions
Acquisition Is Expected To Generate Significant Earnings Accretion For ARRIS, Increase Patent Portfolio, And Accelerate New Products To Market
SUWANEE, GA and MOUNTAIN VIEW, CA, December 19, 2012 – ARRIS Group, Inc. (NASDAQ: ARRS), a global innovator in broadband media technology, and Google Inc. (NASDAQ: GOOG) today jointly announced that ARRIS and Motorola Mobility, a Google subsidiary, have entered into a definitive agreement under which ARRIS will acquire the Motorola Home business from Motorola Mobility, for $2.35 billion in a cash-and-stock transaction approved by the Boards of Directors of both companies. The acquisition will be on a cash-free, debt-free basis and is expected to be significantly accretive to ARRIS’ Non-GAAP earnings starting in the first full year after closing.
Under the terms of the agreement, upon closing of the transaction, Google will receive $2.05 billion in cash and approximately $300 million in newly issued ARRIS shares, subject to certain adjustments provided for in the agreement, representing an approximately 15.7% ownership interest in ARRIS post-closing.
Acquiring Motorola Home will enhance ARRIS’ ability to provide next-generation consumer video products and services, supporting a more comprehensive product offering while also accelerating its ability to deliver a comprehensive set of industry-leading new products for broadband to a wide spectrum of customers. The transaction will increase ARRIS’ patent portfolio and provide a license to a wide array of Motorola Mobility patents.
“This transformational combination of two complementary businesses will create a leading end-to-end provider of today’s video, data and voice products and tomorrow’s next-generation IP-based broadband products,” said Bob Stanzione, Chairman and CEO of ARRIS. “Ever-expanding consumer demand for bandwidth will continue to drive growth across cloud and network technologies we provide that enable innovative home entertainment products and services.”
“Acquiring Motorola Home builds on ARRIS’ rich history, creating a global player with significant footprint, revenue and cash flow. It also adds expertise in video and a larger presence in the home to our core strengths in voice and data, ensuring we are even better positioned to capitalize on and manage the evolution toward multi-screen home entertainment. We look forward to working with the Motorola Home team as we integrate their complementary product portfolio and engineering expertise to accelerate best-in-class end-to-end solutions to a broader customer base and increase value for shareholders,” Stanzione continued.
Together, ARRIS and Motorola Home will have a global presence with over 500 customers in 70 countries, more than tripling ARRIS pro forma combined revenue to approximately $4.7 billion for the trailing four quarter period ended September 30, 2012. The combined entity will offer a wide array of products and solutions and will have an expanded customer base encompassing the full spectrum of broadband content and service providers.
“Our Home business has been a vibrant part of Motorola Mobility’s portfolio, innovating while delivering strong financial performance,” said Dennis Woodside, Chief Executive Officer of Motorola Mobility, the Google subsidiary that is the parent of Motorola Home. “The industry faces its biggest technology transformation, and together ARRIS and Motorola will be able to accelerate related innovations such as the introduction of the IP Connected Home environments that service providers need and that their consumers crave.”
“We share a similar vision and strategy with ARRIS for the industry’s migration to IP. The combination of our solutions, expert technologists and roadmaps promises to transform how service providers deliver the smart, simple connected home to consumers throughout the world,” said Marwan Fawaz, the Executive Vice President of Motorola Mobility who leads Motorola Home.
Motorola Home is a profitable business that generated revenues of $3.4 billion for the trailing four quarters ended September 30, 2012. The combination is expected to generate approximately $100 - $125 million in annual cost synergies.
The transaction is expected to close by the second quarter of 2013, subject to customary approvals and closing conditions.
The cash portion of the consideration to be received by Google at closing will be funded through debt financing commitments from Bank of America Merrill Lynch and Royal Bank of Canada.
Evercore Partners is acting as lead financial advisor and Troutman Sanders is acting as lead legal counsel to ARRIS on this transaction. Bank of America Merrill Lynch is also advising ARRIS. Barclays is acting as financial advisor and Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel to Google on this transaction.
Conference Call and Webcast Details
ARRIS will host a conference call at 6:30 pm EST today to discuss this announcement. You may participate in this conference call by dialing (800) 299-7098 or (617) 801-9715 for international calls prior to the start of the call and providing the ARRIS Group, Inc. name, conference pass code 92735185, and Bob Puccini as the moderator. A replay of the conference call can be accessed approximately two hours after the call through December 26, 2012 by dialing (888) 286-8010 or (617) 801-6888 and using the pass code 25900440. Live internet access to the call will be available through the Investor Relations section of the Company’s website at http://www.arrisi.com. A replay will also be made available for a period of 12 months following the conference call on ARRIS’ website at http://www.arrisi.com.
ARRIS is a global communications technology company specializing in the design, engineering and supply of technology supporting triple- and quad-play broadband services for residential and business customers around the world. The company supplies broadband operators with the tools and platforms they need to deliver converged IP video solutions, carrier-grade telephony, demand driven video, next-
generation advertising, network and workforce management solutions, access and transport architectures and ultra high-speed data services. Headquartered in Suwanee, GA, USA, ARRIS has R&D centers in Suwanee, GA; Beaverton, OR; Lisle, IL; Kirkland, WA; State College, PA; Tel Aviv, Israel; Wallingford, CT; Waltham, MA; Cork, Ireland; and Shenzhen, China, and operates support and sales offices throughout the world. Information about ARRIS products and services can be found at http://www.arrisi.com
About Motorola Mobility
Motorola Mobility, owned by Google, fuses innovative technology with human insights to
create experiences that simplify, connect and enrich people’s lives. Our portfolio includes converged mobile devices such as smartphones and tablets; wireless accessories; end-to-end video and data delivery; and management solutions, including set-tops and data-access devices. For more information, visit motorola.com/mobility.
About Motorola Home
Motorola Mobility’s Home business delivers the smart, simple connected home, which is driving the evolution of TV. The company is a global IP business that is pioneering advancements in the cloud, the network, and the home to enable the desired IP Connected Home and future service provider revenue streams. Its end-to-end platform includes advanced software and network technology, services and systems integration, content security, managed home solutions, and next-gen home devices that deliver rich user experiences. For more information, visit: http://www.motorola.com/Video-Solutions/US-EN/Home.
About Google, Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google’s innovations in web search and advertising have made its website a top Internet property and its brand one of the most recognized in the world.
Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Email Julie at [email protected]
NewsThese C Seed Supermarine TVs and Speakers Retract for Discreet Yacht Installations
How a ‘Custom’ Integrator Hangs a TV
New RMR Opportunity: Smart Thermostat Service?
4 Network Troubleshooting Lessons for Newbie Installers
Product Briefs: OneVision VR; URC Sonos Module; Luxul Customer Assurance Program
View more News
Take Our Latest QuizzesDo You Know the Origin of These Brand Names? Take the Quiz
So You Think You Know Smart Lights? How about a Dimesimeter?
Cover Your AAS: 4 Questions to Reveal if You’re Ready for an As-a-Service Model
Test Your CES Knowledge! Take This Short Quiz
Who Buys Smart Home Tech? Test Your Knowledge of the Home-Tech Market