Next Level’s Stubbornness Pays Off

For weeks, Next Level Communications has stubbornly resisted a $30 million buyout bid from Motorola , urging shareholders to reject the “inadequate” price tag.

The hardball tactic worked as the Schaumburg, Ill., mobile phone giant today boosted its offer to $34.05 million for the 26 percent of the broadband access equipment maker it does not already own.

The deadline for Next Level stakeholders to tender their shares is now April 11.

Motorola stressed that it is upping its offer to get the deal done, not because of any change in Next Level’s financial position and business segment.

“It is in neither party’s interest for this transaction to become further protracted,” Donald McLellan, a Motorola vice president said.

An independent committee hired by Next Level to evaluate the offer has recommended (by a 3-1 vote) that shareholders accept the new offer.

Committee members Alex Good and Paul Latchford laid out their reasoning in a statement.

“Given Next Level’s current financial situation and an absence of present acceptable financing alternatives, the revised offer represents the best value available for the Next Level minority stockholders,” the pair said.

Next Level and Motorola have also take steps to settle lawsuits arising out of the initial offer. The agreements require court approval.

Motorola acquired its Next Level stake by buying General Instrument Corp. in January 2000. At the time, Motorola was making acquisitions (as well as significant venture capital investments) to expand its presence and profits beyond handsets.

Since then, however, the telecom equipment market has been tripped by the economy. Carriers and communications providers have 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.

But despite recently announced deals, and narrower losses in Next Level’s most recent quarter, Motorola worried that the firm’s stock price, which has languished below the market-required $1 per share mark in recent months, would cause potential customers to choose larger vendors.

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