Motorola Shares Jump on Acquisition Talk

<I>Dow Jones</I> reports that India-based Videocon will make an offer for the cellphone business Motorola is looking to splinter off.
By Robert Holmes ,

Updated from 3:21 a.m. EDT

Shares of

Motorola

(MOT)

jumped on a report that India-based Videocon Industries is looking to acquire the U.S. company's handset business.

Dow Jones

reported Tuesday that Videocon will make an offer for the cellphone business Motorola is looking to splinter off by 2009. Shares of Motorola were rising 33 cents, or 3.6%, to $9.63.

"We are sending

Motorola an expression of interest to buy their handset business," Videocon owner Venugopal Dhoot told

Dow Jones

. "It is true that they have not called for bids, but we have information that Motorola is interested in selling off their handset division. At this point in time, I cannot give out the price or the value of the bid."

American Technology Research analyst Mark McKechnie calls Videocon an unlikely suitor for the handset unit. "Videocon has a market cap of

approximately $1.7 billion, which in our view makes it not a very credible bidder for Motorola's handsets," he says.

Despite that view, Dhoot told

Dow Jones

he sees little difficulty in completing a potential deal. "The market capitalization of the Videocon group is about $2 billion, and including our private companies the net assets of the group is about $3.3 billion," he said. "We can leverage our assets for the Motorola acquisition, and I don't think it should be a problem."

Videocon's announcement comes nearly a week after Motorola said it will

spin off its handset unit into a separate company

. The remaining core will consist of a cable set-top box operation, a wireless networking infrastructure business and a security and government services division.

The choice to split comes two months after Motorola's initial announcement that it was exploring the possible spinoff or sale of its ailing mobile phone business to accelerate its recovery, something billionaire shareholder Carl Icahn has long been pressing the company to do.

Know What You Own:

Motorola operates in the telecom equipment sector, and some of the other stocks in its field include Nokia

(NOK) - Get Report

, LM Ericsson Telephone

(ERIC) - Get Report

and Alcatel-Lucent

(ALU)

. These stocks closed at ($33.49, +5.22%), ($20.37, +3.66%) and ($6.04, +4.86%) respectively. For more on the value of knowing what you own, visit TheStreet.com's

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