After a contentious courtship, the marriage of Motorola and Next Level Communications
has finally taken place.
On Friday afternoon, the handset maker’s $34 million offer was accepted by the broadband equipment maker’s shareholders, ending three months of hard bargaining, legal maneuvers and dueling press releases.
“We can now begin the important work of reintegrating Next Level’s business into our operations, providing a sound financial base to continue its development of compelling broadband solutions to wireline operators,” said Christopher B. Galvin, Motorola’s CEO.
Its unclear if Next Level management will be staying on. A spokeswoman for Motorola said an integration team “is developing a plan with Next Level that meets the needs of Next Level customers and key employees.”
Motorola, based in Schaumburg, Ill., gained a stake in Next Level three years ago when its bought General Instrument Corp. At the time, Motorola was making acquisitions (as well as significant venture capital investments) to expand its presence and profits beyond handsets.
But since then, the telecom equipment market ebbed with the economy. Carriers canceled or delayed orders, resulting in the failure of dozens of companies. Given this backdrop, Motorola provided Next Level with about $175 million in direct financing for operations and $30 million in guarantees.
Despite recent customer wins, and narrower losses in Next Level’s most recent quarter, Motorola worried that the firm’s stock price, which had languished below the market-required $1 per share mark in recent months, would cause potential customers to choose larger vendors.
Executives at Next Level chafed at Mortorola’s first offer — $30 million — saying the price didn’t reflect the company’s longterm prospects. They urged shareholders to reject the offer, which resulted in Motorola extending its deadline several tims and eventually increasing its bid.