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Motorola Acquiring Symbol

The Fortune 100 firm has signed a definitive merger agreement, with a total value of approximately $3.9 billion, to buy Symbol Technologies, one of the largest suppliers of RFID hardware.
By Mary Catherine O'Connor
Sep 19, 2006Murmurs surfaced over the weekend, from The Wall Street Journal and others, that Symbol Technologies had put itself on the sales block, with Motorola being its most likely suitor. Those murmurs were fleshed out Tuesday morning in a conference call hosted by the two companies. Motorola has agreed to acquire all outstanding shares of Symbol for $15 per share in cash. The deal, expected to close late this year or early 2007, is valued at $3.9 billion.

Motorola says it is acquiring Symbol to bolster its enterprise mobility business offerings, part of the company's Networks and Enterprise business unit, through which it offers handheld computers and other rugged mobile devices that enable enterprises to extend network connectivity and computing outside of the conventional office environment. Enterprise mobility is currently Symbol's core business focus, and RFID is a major technology application within the firm's enterprise mobility offerings.

In the late 1990s, Motorola began developing what it coined BiStatix technology—a patented process for printing an antenna using conductive carbon ink and attaching a microchip to it—to create cheap, flexible, passive RFID labels. Needing to invest millions more in research-and-development work to bring the technology to market, Motorola closed down its BiStatix project in 2001. In 2004, Motorola participated in a field test of RFID-enabled payments by partnering with MasterCard on a pilot program in which testers used Motorola cell phones containing near-field communication (NFC) RFID chips to make electronic payments. Motorola, however, has not yet brought to market the prototypical NFC-enabled phones it developed for that trial.

"I think Motorola looked at this [purchase opportunity] and said, 'Between mobile computing, RFID and access to [Symbol's] customers, there are some pretty good opportunities that we can fulfill,'" says Reik Read, senior analyst with Robert W. Baird, a provider of investment banking, wealth-management and other financial services. "Symbol also has some intellectual property that Motorola would really like to have, in the mobile computing and RFID space," he adds.

Symbol has more than 900 patents in the areas of bar-code scanning, RFID, laser projection displays, mobile computing technologies and wireless technologies, according to its Web site, which further notes that 7 million of its mobile computers and scanners are in use today.

Read believes Motorola is interested in acquiring Symbol's key RFID customers in the retail space, such as Wal-Mart, Home Depot, P&G, Nestlé and Sylvania, because it would likely want to provide these firms' mobile computing products and services, as well. He noted that package delivery and logistics services provider UPS uses Symbol bar code technology to track parcels, and is another obvious potential user of Motorola's mobile computing services.

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