New York - Motorola, the world's second-largest maker of cellphones, has agreed to buy Symbol Technologies for $3.9 billion (R28.4 billion) in cash to expand into the market for handheld scanners of retail bar codes.
Investors would receive $15 a share, Motorola said yesterday. The offer was 18 percent more than Symbol's closing price of $12.71 on Friday, before speculation about a possible purchase surfaced.
The deal will make US-based Motorola the biggest seller of handheld scanners with built-in computer features to track goods, which is a $2.4 billion-a-year market.
Symbol is the eighth acquisition announced by Motorola this year as the company seeks sectors with higher profit margins than consumer handsets.
"Symbol may fit well with the restructure of Motorola," Mark Sue, an analyst at RBC Capital Markets, said before the announcement. "Motorola has been able to out-execute its peers, in terms of reining things in and thinking through its business a little better."
Shares of Symbol, which were previously up 14 percent in the past year, rose $1.96 to $14.67 yesterday in New York Stock Exchange composite trading. Motorola rose 5c to $25 in early trading yesterday after gaining 10 percent this year.
Chief executive Ed Zander has revived Motorola since taking the helm in 2004 by honing the design teams to produce the best-selling Razr cellphone, disposing of divisions such as the microchip unit and overhauling the firm's supply chain.
In July, Motorola agreed to buy Broadbus Technologies, adding equipment and video software to its home entertainment business.
Weeden analyst Kevin Starke said bar code scanners were more profitable than consumer products such as phones.
Motorola's gross margin was 32 percent last year. Symbol's margin was 45 percent.
Motorola's sales of wireless scanners were previously isolated to the mail courier market. Two years ago the company beat Symbol to win a three-year contract from the US Postal Service to make and supply handheld scanning devices. The tender was worth as much as $300 million.
The acquisition, which is subject to regulatory and shareholder approval, would probably close by early 2007, Motorola said. Symbol would add to earnings a share in the first year after that. The business would fold into Motorola's networks and enterprise unit.
Symbol was wracked by corporate fraud indictments in 2004 after demand withered as the technology bubble burst, but chief executive Sal Iannuzzi has focused on winning revenue from new products and limiting expenses to shore up profit margins. Symbol's sales rose 2 percent last year after growing 13 percent in 2004.
Symbol also gives Motorola entry into the high-growth market for radio frequency identification products, which should eventually replace traditional bar code scanners for retailers. - Bloomberg