Silver Lake invests $1 billion in Motorola Solutions
Schaumburg-based Motorola Solutions Inc., the maker of communications equipment that this year failed to sell itself, said Wednesday it is receiving a $1 billion investment from private-equity firm Silver Lake aimed at stepping up growth in its public-safety and services businesses.
The communications company is building out its software and services business, which include video monitoring and data analytics, to diversify away from two-way radios and pagers. Silver Lake will help with strategic partnerships and acquisitions, Motorola said.
Reports also surfaced Wednesday that Motorola Solution might move more workers from the suburbs into a Chicago office. However, company spokeswoman Tama McWhinneya declined to give specifics.
"We have not announced any plans regarding downtown," she said. "We are evaluating several options to determine the best approach to meet our facility needs as a smaller and more efficient company."
Of the Silver Lake investment, Motorola Solutions Chairman and CEO Greg Brown said it will "accelerate growth in our smart public safety solutions and services businesses and represents a strong vote of confidence in our company's strategy. We also announced our intent to repurchase up to $2 billion of our stock through a tender offer. These steps reflect our confidence in the future value of our business while allowing us to maintain considerable financial flexibility to pursue further growth."
Silver Lake managing directors Egon Durban and Greg Mondre will also join the board of Motorola Solutions when the deal closes, likely during the third quarter, the company said. Silver Lake has offices in New York, California, and in Europe.
"They're slowly going to take this company private," said Keith Housum, an analyst at Northcoast Research in Cleveland. The Silver Lake investment allows Motorola to invest in acquisitions and research without affecting its income statement, Housum said.
Motorola Solutions also said it would buy back as much as $2 billion of its stock at a price it hasn't determined yet. The company reported second-quarter earnings, excluding certain items, of 68 cents a share, compared with an average analysts' estimate of 54 cents.
The Silver Lake deal is a step in the right direction, but it's too early to say what the long-term impact will be, Housum said.
"This thing is probably stuck in the $60 to $70 range for a while. We really need to understand more of this Silver Lake investment," he said.
Gemma Hart, a spokeswoman for Silver Lake, wasn't immediately available for comment Wednesday.
Motorola failed to find a buyer among private-equity funds and industrial companies including Honeywell International Inc. and Tyco International Plc, people with knowledge of the matter said in April. It was too big a target for any single fund, one of the people said at the time.
"This confirms that there was definitely some truth to the rumor that there was no one willing to make the jump into them," Housum said.
•Daily Herald Business Writer Anna Marie Kukec contributed to this report.