Zebra Tech to buy Motorola Solutions' enterprise business

Tue Apr 15, 2014 1:33pm EDT
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By Abhirup Roy

(Reuters) - Barcode printer maker Zebra Technologies Corp said it would buy Motorola Solutions Inc's enterprise business, which makes rugged mobile computers, tablets and barcode scanners, for $3.45 billion in its biggest deal ever.

The deal will allow Zebra, whose products help companies such as Amazon Inc track inventory and supply chains, to enhance its portfolio through a range of Internet-connected devices.

Zebra's shares fell 11 percent to $60.77 on the Nasdaq on concerns the company's borrowings to fund the deal would be as big as its market value of $3.44 billion as of Monday's close.

Zebra will finance the deal through a combination of $200 million cash on hand and $3.25 billion in debt, comprising a credit facility and issuance of debt securities.

"It's an aggressive play by Zebra to fortify their position in the entire AIDC (automatic identification and data capture)space," Northcoast Research analyst Keith Housum said.

"It's a good long-term play but in the short term, I think it's going to be challenging," Housum said, noting the large debt and the fact that the enterprise business has struggled to grow organically in the past two years.

The business, which accounts for about a third of Motorola Solutions' total revenue, has suffered as clients delay orders and cut spending.

Zebra, however, said it expected the deal to add to earnings immediately after closing at the end of this year.   Continued...

Greg Brown, Chairman and CEO, Motorola Solutions, arrives to meet with U.S. President Barack Obama and other CEO's at the White House in Washington in this file photo taken February 5, 2013. REUTERS/Joshua Roberts/Files