In a move that reflects an accelerating convergence of wireless and other mobility-related technologies, communications giant Motorola Inc., today agreed to acquire Symbol Technologies Inc., a developer of wireless, RFID, bar-coding, and other data-collection products, in a deal valued at $3.9 billion.
Under terms of the agreement, Motorola has offered to acquire all of the outstanding shares of Symbol for about $15 per share. Symbol's stock price had been at about $12.70 prior to news of the deal leaking out over the weekend. The acquisition is subject to regulatory clearance and the approval of Symbol's stockholders. It is expected to be completed late this year or early in 2007.
The technological convergence underway, which both companies refer to when they talk about "enterprise mobility," includes wireless technologies such as Wi-Fi, Wi-Max, RFID, and even so-called mesh networks. In May, for example, Symbol announced what it called its Wireless Next Generation Architecture (Wi-NG), which consolidates Wi-Fi, RFID, voice over wireless local areas networks, mesh, and Wi-Max into an integrated RF switching platform.
"Everything is going digital, and everything digital is going mobile -- this is especially evident in the way businesses are run today," said Motorola chairman and Chief Executive Ed Zander, in a statement. Added Greg Brown, president of Motorola's Network and Enterprise business, into which Symbol will be folded, "Motorola and Symbol share a common vision of providing enterprise mobility solutions. Symbol's world-class product platform complements Motorola's vision of seamless mobility and will be the core of Motorola's enterprise group."
Reaction from market analysts about the acquisition was positive. "It is a little bit of a surprise that it happened this early on," said Andrew Nathanson, practice director, RFID and AIDC technologies at VDC, a market research firm, in an interview. "They are moving to a total RF platform by combining RFID and auto identification. It is complementary on both sides and this will create a broader platform. Their global reach will be monstrous now. They will have a lot more market clout, particularly in RFID."
Radio frequency identification products, such as readers, antennas, and tags, have been an area of focus for Symbol for some time, although the company's activities in this area are still in investment mode and not yet profitable, said Symbol president and CEO Sal Iannuzzi, during a conference call today with financial analysts. But Iannuzzi expressed confidence that with Motorola, Symbol will now be able to move ahead in the market in a "robust way."
The RFID market, while estimated by some analyst firms to be on a 40%-plus per year growth track, appears to be in an adjustment phase. In June, Lockheed Martin completed its acquisition of Savi Technology, Inc., an RFID hardware and software provider. And in August, reader and tag maker Alien Technology withdrew an initial public offering, citing depressed market conditions for new securities offerings across all industries.
Alien is also involved in an RFID patent infringement lawsuit with Intermec, which had traded suits involving automatic identification technologies with Symbol until this past July when the two companies resolved their litigation.
Symbol is still involved in a number of other suits concerning Wi-Fi and bar-code patents, and over the past couple of years has had to deal with legal and accounting difficulties that occurred under a prior management team. Symbol had been forced to restate earnings for 1998 through the first nine months of 2002.
Symbol, founded in 1975, had $1.7 billion in revenues in 2005. Once the acquisition by Motorola is completed, Symbol will become part of Motorola's Networks and Enterprise business. Iannuzzi will join Motorola, reporting to Brown.
Motorola, founded as the Galvin Manufacturing Corp. in 1928, had $35.3 billion in revenues in 2005.