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Motorola Solutions Divests Enterprise Business for $3.5B

NEW YORK (The Deal) -- Zebra Technologies (ZBRA - Get Report), a maker of barcode scanners, printers and other tools, said Tuesday it would acquire the enterprise unit of Motorola Solutions (MSI - Get Report) in a deal valued at $3.45 billion.

The Motorola business to be acquired is a manufacturer of rugged computers, tablets and scanners used by retailers, logistics firms, manufacturers and other corporate users. The business generated sales of about $2.5 billion in 2013.

Lincolnshire, Ill.-based Zebra said that the purchase would create a $3.5 billion business that is able to offer a full line of mobile asset tracking technology. Post-deal Zebra would boast 20,000 channel partners in more than 100 countries and a portfolio of more than 4,500 U.S. and international patents issued and pending.

The company said it would fund the deal, which is not subject to a financing condition, with about $200 million in cash on hand and $3.25 billion in new credit facilities and the sale of debt.

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"This acquisition will transform Zebra into a leading provider of solutions that deliver greater intelligence and insights into our customers' enterprises and extended value chains," Zebra CEO Anders Gustafsson said in a statement. "It positions Zebra as a leading technology innovator, with the accelerating convergence of mobility, data analytics and cloud computing."

The sale continues the dismantling of communications pioneer Motorola, which split its handset and cable box division off in 2010. That unit, Motorola Mobility, was acquired by Google (GOOG - Get Report) in $12.5 billion, with Google later splitting it further and selling most of the assets.

Motorola Solutions retained the rugged computing and government and public safety operations. After the sale to Zebra the Schaumburg, Ill.-based company will be left with its iDEN product portfolio that was previously part of the enterprise business as well as its operations selling professional commercial radio products to government customers.

Company CEO Greg Brown said that the sale follows a strategic review initiated last year that determined that "synergies between our government and enterprise businesses were not as great as the value we could create by being singularly focused on our core government and public safety business."

Brown said proceeds from the sale will be returned to shareholders "in a timely fashion," with Motorola Solutions free to focus solely on its government business.

"Going forward, we will have absolute clarity of purpose and mission as we serve customers globally with our suite of mission-critical communications solutions," Brown said.

Morgan Stanley (MS) is acting as financial adviser to Zebra and is providing a fully underwritten financing commitment for the debt component of the transaction. A Kirkland & Ellis team included partners Henry Kleeman, Scott Falk, Linda Myers and Neil Hirshman are providing Zebra with legal counsel.

Goldman Sachs (GS) and JPMorgan Securities are serving as financial advisers to Motorola, with Winston & Strawn acting as the company's legal adviser and Wachtell Lipton Rosen & Katz providing counsel to the Motorola board.

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