In order to boost its public safety software portfolio, Motorola Solutions Inc. MSI is set to buy U.K.-based communications operator Airwave Solutions Ltd for 817.5 million pounds ($1.24 billion). The deal is expected to close in the first quarter of 2016, subject to regulatory approvals.
Following the announcement, shares of Motorola Solutions gained 3.4% to $73.5 in yesterday’s aftermarket trading session.
Motorola Solutions decided to pay £700 million (approximately $1 billion) at the time of closing of the transaction. In addition, the company will further make a payment of £64 million in Nov 2018.
Motorola Solutions noted that the deal will have an immediate impact on the company’s adjusted earnings and free cash flow, once it closes.
Owned by Australia’s Macquarie Group Ltd., Airwave’s networks run on TETRA technology, offering pubic safety related services which include emergency fire, police and ambulance services. Hence, the complete buyout of Airwave’s networks will not only allow Motorola Solutions to gain access to the TETRA technology which is highly useful for mission-critical operations but will also help the company expand business outside the U.S.
Motorola Solutions ended the third quarter of 2015 with nearly $2.2 billion of cash and cash equivalents. Moreover, the company will raise debt to finance the deal.
Motorola Solutions currently has a Zacks Rank #2 (Buy).
Other Stocks That Warrant a Look
Other favorably ranked stocks worth considering in this sector include InterDigital, Inc. IDCC, ShoreTel, Inc. SHOR and AudioCodes Ltd. AUDC. All three sport a Zacks Rank #1 (Strong Buy).
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