Finance

DOJ Wants More Info From Arris, Google on Motorola Home Bid

So-Called 'Second Request' Issued in Conjunction with Antitrust Review 2/11/2013 1:10 PM Eastern

The U.S. Department of Justice is seeking additional information from Arris Group and Google regarding Arris’s proposed $2.35 billion cash-and-stock acquisition of Motorola Mobility’s Home unit.

Arris announced the DOJ's information request Monday, but didn't specify what the agency asked for. The information request was issued in conjunction with the DOJ's review of the transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the company said.

“Arris believes the transaction is pro-competitive and will create compelling new opportunities for its customers and partners worldwide,” Arris said in a statement. “Close scrutiny is typical in transactions of this size.”

The effect of the so-called “second request” is to extend the waiting period imposed by the Hart-Scott-Rodino antitrust act until 30 days after each company has substantially complied with the information request, unless the period is extended voluntarily by the companies or terminated sooner by the DOJ. According to Arris, both companies intend to respond to the information request as quickly as practicable and “continue to work cooperatively with the DOJ in connection with its review.”

Arris announced the agreement with Google to buy Motorola Home on Dec. 19. On Monday, Arris said it still expects the deal to close in the second quarter of 2013.

On Arris’s fourth-quarter 2012 earnings call with analysts last week, CEO Bob Stanzione said the financing commitments for the Motorola Home acquisition are nearly complete. “Integration teams are working their way on transition plans,” he said. “We still anticipate the closing can occur in Q2, but we are now in that awkward period as we await DOJ approval.”

Google in January reported that Motorola Home generated about $820 million in sales for the fourth quarter of 2012 with an operating margin of 4.3%. Stanzione, on the call with analysts, said the sales for the Home group “were just a bit better than we were thinking” and that the margins were in line with expectations.

Meanwhile, also last month, Arris said it will sell Comcast approximately $150 million in stock in connection with the Motorola Home transaction, which will result in the cable company and Google each owning about 7.85% of Arris.

September