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Motorola eyes $4.5 billion home/networks unit sale: sources
Wed Nov 11, 2009 2:59pm EST
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NEW YORK (Reuters) - Motorola Inc is in the early stages of looking into a potential sale of its $4.5 billion television set-top box and network equipment business, two sources said on Wednesday.
Motorola is in the early stages of seeking buyers for the unit, whose suitors include private equity firms and other communications equipment makers, said one source familiar with the situation.
Motorola may decide to keep the unit in the end, said the source, who was not authorized to speak with the media.
J.P. Morgan Chase & Co and Goldman Sachs Group Inc are advising Motorola on the possible sale, the source said.
J.P. Morgan and Goldman Sachs declined to comment.
Motorola, which has been losing market share in its cellphone business for years, declined to comment, but said it was still focused on its previously stated plan to separate its handset business from the rest of the company.
Analysts said there could be a lot of interest in the home and networks unit, particularly because Motorola has a strong market share in the set-top box segment, where it is bigger than Scientific Atlanta, owned by Cisco Systems Inc.
But RBC analyst Mark Sue said that a divestiture of any of Motorola's other business units could hurt Motorola's money- losing handset business.
"The mobile devices business still needs the rest of the businesses to fund it operations. It hasn't really recovered fully yet so it would be a little too early to cut off the lifeline," Sue said.
While growth in the mobile network equipment market has slowed dramatically in recent years, rival gear makers could see Motorola as a way to increase their market share, particularly in the United States.
Avian Securities analyst Matthew Thornton said a $4.5 billion price tag would represent an 18 percent premium over his estimated valuation of $3.8 billion for the home and networks unit, based on operating earnings.
Potential suitors could include Ericsson, Samsung Electronics Co Ltd, Alcatel Lucent SA or Nokia Siemens, a venture of Nokia and Siemens AG, analysts said.
The Wall Street Journal cited China's Huawei Technologies Co Ltd and UK based Pace Plc as other potential buyers.
Private equity firms, including TPG, also have taken a look at the unit, a source briefed on the process said. The source could not be identified by name because they were not authorized to speak to the media.
The Wall Street Journal cited Silver Lake Partners as another potential bidder.
TPG declined comment and Silver Lake Partners was not immediately available for comment. Continued...
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