If the lingering Google
sale of the Motorola Home business was adding to your holiday stress, here's an early present: Google struck a deal with Arris Group Inc.
late Wednesday, for $2.35 billion in cash and stock.
That's $2.05 billion in cash and roughly $300 million in newly issued Arris stock, if you're keeping score at home. The shares give Google a 15.7 percent interest in Arris.
Arris also gets a license to those Motorola Mobility patents, which supposedly were the jewel of the Google/Motorola deal in the first place.
The deal is expected to close by April.
Why this matters
Sources were beginning to doubt Google would get the $2 billion price it wanted. But it worked out for the company, as Arris beat out Pace plc, which definitely submitted a bid, and possibly CommScope Inc. and Ericsson AB, which had been pegged as likely buyers.
The deal is going to be a challenge for Arris, which would double its head count to around 4,200. But the company catapults into a new level of business. Roughly 30 percent of its sales would be in set-top boxes after the deal, and Arris would become a stronger CMTS competitor to Cisco Systems Inc.
The strategy brains at Suwanee have already thought through some of this integration, I suspect, but it will be challenging, regardless of smooth integration spin. This is 3x bigger than C-COR, the deal that created a "cable gear giant" five years ago. Maybe market cap/value a better metric: ARRS was bigger than C-COR, whereas MOT is bigger (40%?) than ARRS.
>Having lived through it, Tellabs would be a terrible PON partner for the fMot buisness. Heck they HAD a 90% market share inside Verizon and allowed that to fritter away
> What I would expect is any non-cable portions of the old Mot PON business get either shut down or sold. But Mot had few customers for the business so it has almost no Telco value.
Having lived through it, Tellabs would be a terrible PON partner for the fMot buisness. Heck they HAD a 90% market share inside Verizon and allowed that to fritter away.
What I would expect is any non-cable portions of the old Mot PON business get either shut down or sold. But Mot had few customers for the business so it has almost no Telco value.
I was interested to see that Google will keep a stake in Arris, so they will still have a link to the cable guys, but with Arris serving as the giant trust buffer. As for the price, i think Google got pretty close to what it wanted if we are to believe that the anticipated sales range was $1.5B to $2.5B. And some of those licenses that got baked into the deal ensured that Google didn't have to hand over all the IP.
Now we'll have to see if Arris got what it wanted...or more than it bargained for. The scale of the integration effort for this one makes the previous deals pale. JB
Thanks for shout out, Jeff. ARRS had smarts and ambition to match the Home assets. Seemed worth including in the list. Wondering now about GOOG's takeaway. Bought MOT for $13b, now less $2+b and the Home patents? They kept the Mobility patents? Did they get what they wanted?
There is quite an overlap,w hich i'll ask them about today. Arris said it has no intention to exit any businesses, but I wonder if they will be interested in selling off some of the redundant assets. JB
It's clear that the video platforms were the main course in this deal. The transaction is consistent with previous purchases like EGT, Digeo, and Bigband. But there is a bunch of redundancy especially with respect to CCAP/next gen. Homegrown E6, Bigband MSP, and now Moto VESP - they won't all coexist so it will be interesting to see what strategy takes hold.
And that strategy will be very important because ARRIS is losing CMTS market share; word is that they no longer have any C4 footprint at Charter and Cox. Wonder if any other MSO's would follow suit. The point is that selling new boxes when the old ones were removed is a tall order...
The real jewel in all this is the PON business located in Lowell, MA. Will be interesting to see how Arris integrates this into it's portfolio. It's a shame that Tellabs didn't snatch up this gem.
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