Motorola Plans to Split Into Two Separate Companies in Q1 2011

Speculation has been flying around for at least a year and a half now that Motorola was planning on either selling its mobile division or splitting it off into its own publicly traded company using the same Motorola branding. Finally today we have official word on what Motorola plans to do, and it will be happening this time next year.

Through an official press release and webcast today, Motorola announced it will officially separate into two independent and publicly owned companies: one being the Mobile Devices and Home business entity, and the other will be focused on Enterprise Mobility Solutions and Networks businesses.

What will the Enterprise company do, specifically? Ultimately, it will offer a large portfolio of products like mobile computers, wireless network infrastructure, two-way radios, and secure public safety systems. That’s quite a handful!

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Both businesses will use the Motorola brand; not too many details are available yet about how this will work, but the PR did mention that only one of the entities can own the actual brand, and that honor will go to the Mobile Devices and Home business, which will in turn license it royalty-free to the Enterprise entity.

David Dorman, chairman of Motorola’s Board of Directors, said:

The board of directors supports the planned separation of Motorola into two industry-leading public companies…We believe this structure provides significant operational and strategic flexibility for both companies, positions them for future success, and enhances long-term shareholder value.

So there you have it. Official word of Motorola’s plans. What do you think about them?

Here’s the full text of the PR:

Motorola Targets First Quarter 2011 to Separate into Two Independent, Publicly Traded Companies

–Mobile Devices and Home Businesses Target Growth Opportunities from Convergence of Mobility, Media and the Internet –Enterprise Mobility Solutions and Networks Businesses to Focus on Mission- and Business-Critical Solutions for Enterprise, Government and Wireless Operators –Company to Host Conference Call Today at 5:00 p.m. ET

SCHAUMBURG, Ill., Feb 11, 2010 /PRNewswire via COMTEX News Network/ — Motorola, Inc. (NYSE: MOT) today announced the Company is targeting the first quarter of 2011 for its planned separation. Motorola intends to separate into two independent, publicly traded companies. One will include the Company’s Mobile Devices and Home businesses, and the other will include its Enterprise Mobility Solutions and Networks businesses.

Dr. Sanjay Jha, co-chief executive officer of Motorola, Inc., will serve as chief executive officer of Motorola’s Mobile Devices and Home businesses effective immediately. This business will offer a comprehensive portfolio of mobile converged devices, digital entertainment devices in the home, and end-to-end video, voice and data solutions. Working with network operator partners, the company will also enable more advanced personalized services that leverage the capability of expanding wireless and wireline broadband availability.

Dr. Jha said, “The combination of Mobile Devices and our Home business brings together two highly complementary and innovative organizations. Together we will be best positioned to lead in the convergence of mobility, media, and the Internet. Our expanding portfolio of smartphones and end-to-end video content delivery capabilities will enable us to provide advanced mobile media solutions and multi-screen experiences for our customers.”

Greg Brown, co-chief executive officer of Motorola, Inc., will serve as chief executive officer of Motorola’s Enterprise Mobility Solutions and Networks businesses effective immediately. This business will offer a comprehensive end-to-end portfolio of products and solutions, including rugged two-way radios, mobile computers, secure public safety systems, scanning, RFID, and wireless network infrastructure.

Mr. Brown said, “We are the leading mission- and business-critical technology solutions provider with a commitment to innovation. As an independent company, we will continue to build on our long-standing tradition of strong customer relationships, leading-edge product development, quality, thought leadership, and solid financial performance.”

“The board of directors supports the planned separation of Motorola into two industry-leading public companies,” said David Dorman, chairman of Motorola’s Board of Directors. “We believe this structure provides significant operational and strategic flexibility for both companies, positions them for future success, and enhances long-term shareholder value.”

Completing the Separation

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. Completion of the spin-off is subject to a number of conditions, including, among others, confirmation of the tax-free nature of the transaction, as well as effectiveness of a Form 10 Registration Statement to be filed with the U.S. Securities and Exchange Commission (“SEC”). Motorola will distribute an information statement to shareholders following completion of the SEC’s review of the Form 10.

The Company noted that there can be no assurance that any separation transaction will ultimately occur or, if one does occur, there can be no assurances as to its terms or timing.

About Motorola

Motorola is known around the world for innovation in communications and focused on advancing the way the world connects. From broadband communications infrastructure, enterprise mobility and public safety solutions to high-definition video and mobile devices, Motorola is leading the next wave of innovations that enable people, enterprises and governments to be more connected and more mobile. Motorola (NYSE: MOT) had sales of US $22 billion in 2009. For more information, please visit www.motorola.com.

Conference Call and Webcast

Motorola will host a conference call today February 11, 2010 beginning at 5:00 p.m. Eastern Time (USA) to discuss today’s announcement. The conference call will be webcast live at www.motorola.com/investor.

Author: Brad Molen

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