Google Settles on Arris as Buyer for Set-Top Box Business

on Dec 20, 2012

On Thursday 20 December news agency Bloomberg reported that Google (NASDAQ:GOOG) has agreed to sell Motorola Home to Arris Group (NASDAQ:ARRS) for $2.35 billion (£1.45 billion).

Arris, a global communications technology company, will pay about $2.05 billion (£1.26 billion) in cash and $300 million (£185 million) in newly issued common stock giving Google about 15.7 percent ownership in the company. The little-known US firm will have to borrow the cash in order to pull off the deal.
Reuters reported that the acquisition will be significantly accretive to Arris’ non-GAAP earnings in the first full year after closing. Ariss’ share price soared in afterhours trading by 16.92 percent to $17.00.

The company reported sales of $1.3 billion (£800 million) in the 12 months to September compared with $3.4 billion (£2.09 billion) generated by Motorola Home. The Georgia-based firm manufactures voice and data equipment used predominantly in the networks of cable TV companies. By acquiring Google’s set-top box business, Arris will be able to extend its reach to equipment inside customers’ homes while also gaining an advantage against rivals in the telecommunications sector.

“This is a transformational deal for us,” Bob Stanzione, Arris’ chief executive officer said in a conference call. “There’s significant earnings accretion.”
**Pace Loses the Bid Battle**
Google acquired Motorola Home through its purchase of its parent company Motorola Mobility Holdings for about $12.5 billion (£7.7 billion). In May the tech giant received numerous offers from prospective buyers for the set-top box business. “Google never really wanted the set-top box business,” Brian Wieser, an analyst at Pivotal Research Group, told Bloomberg in an interview. “What they wanted were the mobile patents. It was very clear this wasn’t why they were buying the business in the first place.”

!m[The Tech Giant Gladly Divests from a Non-Essential Business and Receives £1.26 Billion in Cash](/uploads/story/1077/thumbs/pic1_inline.png)
Pace (LON:PIC), a UK company listed on the London Stock Exchange previously thought of as the leading bidder for Motorola Home, announced it was unable to reach an agreement with Google on terms that its Board believes would have been in the best interest of its shareholders. Pace has contacted the Financial Services Authority (FSA) to request that the suspension of its securities from the Official List is lifted. Shares in Pace are once again available for trading and after falling to an intraday low of £1.7520 at 09.50 GMT the stock climbed back up and at 10.40 GMT is trading at £1.8640 or 0.59 percent above Wednesday’s closing price.

**Google Anti-Trust Deadline**
This week EU regulators said they are giving Google one month to address complaints related to search results favouring its own services over those of its rivals. If the tech giant is found guilty of breaching anti-trust rules it could face a fine of up to $4 billion (£2.5 billion). “Since our preliminary talks with Google started in July, we have substantially reduced our differences,” wrote Joaquin Almunia, EU competition commissioner, in an emailed statement. “On the basis of the progress made, I now expect Google to come forward with a detailed commitment text in January 2013.”
Yesterday Bloomberg reported that the Federal Trade Commission will not make a final decision on its anti-trust probe of Google until next year. The agency has been expected to announce the results of its 20-month investigation sometime this week but two people familiar with the matter told Bloomberg the decision would be delayed.
Google’s share price remained largely unaffected by the news falling 0.36 percent in afterhours trading to $717.50.


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