Motorola Inc is seeking to sell its largest division, which makes equipment for cable and wireless companies, the Wall Street Journal’s (WSJ) Web site reported on Wednesday.
The company is exploring a sale worth about US$4.5 billion, the Web site said, citing “people familiar with the matter.”
A Motorola spokeswoman said the company would not comment on “rumor or speculation.”
Potential buyers of the “Home and Network Mobility” unit include private equity firms and makers of telecommunications equipment like Samsung Electronics Co of South Korea and Huawei Technologies Co (華為科技) of China, the Journal said.
Private-equity firms including TPG and Silver Lake may be interested in the business, the newspaper reported, citing people familiar with the discussions.
“Private equity makes more sense to me” than public companies, said Matt Thornton, an analyst at Avian Securities LLC in Boston, who rates Motorola “positive” and doesn’t own the shares.
“The home networks business isn’t a growth business,” he said. “What it can be is a cash-flow generator. It doesn’t require investments.”
A price tag of about US$4.5 billion, reported on Wednesday by the Journal “makes sense,” said Thornton, who said that would represent an 18 percent premium over his US$3.8 billion valuation.
Jennifer Erickson, a spokeswoman for Motorola, declined to comment.
Motorola shares fell US$0.08 to close Wednesday at US$8.77.
The company has two other divisions. Mobile Devices makes cellphones, and Enterprise Mobility makes police radios, bar code scanners and other equipment for government and corporate use.
The company’s stated long-term plan has been to separate Mobile Devices from the other two divisions.
That was originally supposed to happen this year, but the recession and the poor performance of the handset division forced Motorola to postpone that move indefinitely.
Home and Networks Mobility could be more attractive to buyers.
Unlike Mobile Devices, it makes money, posting an operating profit of US$199 million on sales of US$2.1 billion for the third quarter.
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