Zebra to Acquire Motorola Solutions
News emerged last night that indicated that Zebra was to acquire Motorola Solutions in a deal with a reported value of $3.4 billion.
The news led to Zebra’s shares falling @10% on the news. Some clearly concerned that financing the deal with debt was risky. Zebra had sales of around $1 billion in FY 2013 so this acquition of Motorola Solutions who had sales of around $2.5 billion will take some digesting.
Motorola Solutions includes most of the old Symbol Technologies Enterprise Mobility and scanning business that Motorola acquired in 2007, for $3.7 billion. This leaves whats left of Motorola to deal with the public safety and government markets.
These companies have worked together for many years although not many industry wonks would have bet on the acquisition being this way round. With Honeywell acquiring Intermec last year this is another example of industry consolidation.
So is this a game changer? Well it could be but it seems like a huge gamble by Zebra management. As Intermec proved over many years having a portfolio of printers and sector specific hand held devices is not a guarantee of securing both even in major corporate managed accounts. How Zebra will mange the erosion of value from the traditional rugged hand held value proposition v smartphone collision will be a huge challenge.
The street price of a rugged Android smartphone is only heading in one direction so maybe having printers media RFID and a handle on the “internet of things” will give new Zebra the secret sauce it needs to compete in a device market that is becoming more fragmented.
In the short term shoving together the two sales organisations will give management the opportunity to revise the major account and channel structure for the future.
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