Video

Arris Expected to Bid for Google’s Motorola Set-Top Unit: Report

Proposals from Interested Buyers Due Friday, According to WSJ 12/07/2012 8:02 AM Eastern

Arris Group and private-equity firms are expected to be among the bidders for Motorola Mobility’s Home group, with Google setting a Friday deadline for proposals from interested buyers, The Wall Street Journal reported, citing anonymous sources.

Representatives for Google, Motorola and Arris declined to comment. Reports surfaced earlier this summer that Google selected Barclays to handle the sale of the cable-focused Home unit.

According to the Journal, Pace and Technicolor also could be in the mix to pick up the Motorola Home division, which comprises set-top boxes, video distribution systems and broadband equipment. Bids are expected to be between $1.5 billion to $2.5 billion and Google has indicated it might help finance a deal, the newspaper reported.

For Arris, “the deal could present incremental risk to Arris’s business model, as a transaction of this size would require raising significant debt or issuing a considerable number of shares,” Raymond James analyst Simon Leopold wrote in a note to clients.

If Google helped finance the deal, Leopold said, that “could mitigate some of the risks and concerns of investors, and we continue to see the deal as having the potential to be materially accretive” to Arris’s 2013 earnings potentially. With the Motorola Home group, Arris's earnings per share could rise from $1.23 to $2.47 in calendar year 2013, he wrote.

In May, Google closed the $12.4 billion cash acquisition of Motorola Mobility, driven largely by Google's desire to obtain the latter's patents. In August Google announced plans to lay off about 20% of Motorola Mobility's workforce, eliminating about 4,000 jobs, and subsequently said it may make additional cuts.

Google decided to sell the Home group “due to the costs and the fact that cable customers might be leery of doing business with Google,” the WSJ reported.

The Friday deadline for bids could be extended, according to the Journal.

Google hired Marwan Fawaz, formerly chief technology officer of Charter Communications, to run Motorola’s Home group in late June -- a move some observers interpreted as an attempt to reassure MSOs that the business was in good hands. In an interview in October, Fawaz insisted that large cable operators and other service provider customers have not been “distracted” by the Google acquisition.

 

September