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Motorola To Split In Two By 2011Motorola To Split In Two By 2011
Today <a href="http://mediacenter.motorola.com/content/detail.aspx?ReleaseID=12429&NewsAreaID=2">Motorola confirmed earlier reports</a> that it plans to separate the company into two separate business units. The mobile devices unit will be paired with the cable set-top-box business and spun off from Motorola's enterprise mobility business as its own company.
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Today Motorola confirmed earlier reports that it plans to separate the company into two separate business units. The mobile devices unit will be paired with the cable set-top-box business and spun off from Motorola's enterprise mobility business as its own company.Motorola has talked about splitting up its business units for what feels like years. First it wanted to spin off its handset business, then its cable box business, and never received offers that it considered worth taking. Today, Motorola says it has come up with a plan to fix everything.
It will break the company into two financially separate, publicly traded companies, both called Motorola. The mobile device and cable box business will be its own unit, with the enterprise mobility business forming the other.
As part of the planned split, co-CEO Sanjay Jha will become the CEO of the mobile devices and cable box business immediately. Co-CEO Greg Brown will become CEO of the enterprise mobility unit.
Motorola is targeting the first quarter of 2011 to complete the split. Will it have the intended effect of saving all three portions of the company? Let's hope so. Motorola seems to have rediscovered its footing in recent months -- at least as far as its mobile devices are concerned -- and it needs to continue that momentum. This could help.
As for the specifics of the break up, they involve a tax-free stock dividend to Motorola shareholders. here's the legalese:
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.
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