This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com
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Motorola, the listed Schaumburg, IL-based communications equipment provider, has seen interest from foreign companies who initially rejected a handset division deal, a source and banker told mergermarket.
A Motorola spokesperson declined comment.
On 31 January, Motorola announced it would explore the structural realignment of its businesses to better equip its mobile devices to recapture global market leadership. The separation of mobile devices was an option, the company noted.
While many leading Asian telecommunications equipment and device manufacturers stated soon after the announcement they would not be interested in acquiring Motorola’s struggling handset business, most of them are expressing interest in discussing some form of partnership, the source said. Asian mobile-device companies view this as a strategic asset consisting of a strong US distribution network and a well-recognized franchise name, he added.
The deal structure is likely to be complex and unique to Motorola, said the source, but could follow the structures that have proven successful in other transactions such as Nokia-Siemens and Sony Ericsson. Or an IBM-Lenovo deal where Motorola keeps an equity ownership interest but sells a large portion of the equity to a more efficient operator could be struck.
In the week following Motorola’s announcement, newswires reported Sony Ericsson in the UK, and LG Electronics and Samsung Electronics in Korea had dismissed the idea of a Motorola handset purchase. Ericsson in Sweden stated it would evaluate the asset but avoided large acquisitions.
Although initial reports indicated Motorola could fetch USD 20m in a sale, in January mergermarket intelligence, an executive from the company questioned those reports, saying a range of USD 10-15bn seemed more in line with the unit’s financial performance. Meanwhile, industry sources speculated that Motorola would more likely enter a joint partnership than sell or spin-off the handset division because the business is economically under stress but a large chunk of Motorola’s revenue.
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