Nokia Siemens Networks (NSN) yesterday confirmed it will buy the bulk of Motorola’s wireless infrastructure business for $1.2 billion (€923 million) in cash.
The price covers Motorola’s GSM, CDMA, W-CDMA, Wimax and LTE businesses, but excludes the US vendor’s iDen division and its wireless patents, NSN said.
While the vendor will finance the deal itself, parent companies Siemens and Nokia will extend a shareholder loan worth €500 million once the acquisition is approved, WSJ.com reports.
NSN CEO Rajeev Suri said the widely-anticipated deal would strengthen the firm’s global presence and “enhance our scale in the United States, Japan, and other priority regions.”
The addition of the Motorola unit would move NSN from no. 5 to no 3 in North America and consolidate its position as no.2 in the global infrastructure market, Suri said.
The deal offers relationships with more than 50 operators, including tier 1 players such as China Mobile, KDDI, Sprint, Verizon Wireless and Vodafone, NSN said.
Motorola’s infrastructure unit posted $3.7 billion in sales in 2009, with 41 Wimax contracts, 30 active CDMA networks and 80 GSM networks in operation.
Julian Bright, senior analyst at Informa Telecoms & Media, said the deal shows NSN has become more aggressive since losing out to Ericsson in the Nortel fire sale in 2009.
“Motorola’s access layer technology, particularly on CDMA and evolution toward LTE, will complement NSN’s strengths in core networks and services,” he said.
The deal would also help shore up NSN’s position in North America and key Asian markets such as Japan and China, but it could struggle to integrate Motorola staff into its structure due to national and cultural differences, Bright said.
NSN will have to incorporate 7,500 Motorola staff, including workers at large R&D sites in the US, China and India.
Analysts said the deal helped Motorola on its path to a planned split between its handset and enterprise businesses early next year.
The company retains most of its mobile patents, which it has cross-licensed to NSN, and the iDen digital radio group, which last year posted revenue of $400 million.
Greg Brown, co-CEO of Motorola, said the deal clears the firm to focus on its government, public safety and enterprise customers.
He said the companies aimed to complete the deal by the end of the year.