September 15, 1999 8:30 AM PDT

Motorola, GI shake on $11 billion merger

Related Stories

It's back to the future for Motorola and Apple

September 2, 1999
Telecommunications giant Motorola today said it will buy General Instrument in an $11 billion stock swap.

Motorola will exchange 0.575 of its shares for each General Instrument share, or 214 million shares, based on yesterday's closing price of 50.5. Following the merger, Motorola shareholders will hold approximately 17 percent of Motorola stock.

The companies expect to close the deal during the first quarter of next year, subject to regulatory and shareholder approval. AT&T subsidiary Liberty Media Group, the largest General Instrument shareholder, has agreed to vote for the merger.

The merger comes during a difficult time for Motorola, which, after downsizing some operations, could be taking on bigger problems with General Instrument, said analysts.

But company executives disagreed, saying the timing is right for the deal.

"We are in the right place and the right time with a lot of momentum," said Edward Breen, chief executive of General Instrument. "We began convergence technology in the home offering all forms of video, data, and all forms of telephony into the set-top box. Now with Motorola, we address all of this in a very important way."

Motorola is preparing for the convergence of broadband communications, cable, and entertainment, executives said. General Instrument, which makes television set-top boxes, fits in with that strategy.

"This partnership will enable us to expand our portfolio for network access, delivering next-generation solutions along with 'home hubs' that will handle high-speed Internet access and video entertainment, as well as carrier-quality voice services," Motorola chief executive Christopher B. Galvin said. "People want access tailored their way and the ability to get online quickly and simply."

Motorola, which already supplies embedded chips for a number of communications products, has been quietly planning a move into television. One recent development is a computer chip for improving digital television reception in large cities.

Leo Hindery, president of AT&T Broadband & Internet Services, said the merger has the potential to address the needs of a wide home-user audience. "This merger makes the promise of delivering ubiquitous, timely services at a cost everyone in our society can afford. No one gets left out in this merger."

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.