Motorola Solutions Inc. is receiving a $1 billion investment from private-equity firm Silver Lake as it looks to drive growth beyond its core business of selling radios to police and fire departments.
The communications equipment company is building out its software and services business, which include video monitoring and data analytics, after failing to sell itself earlier this year. Silver Lake will help with strategic partnerships and acquisitions, Motorola said in a statement Wednesday.
“We’re best in class at the incident, at a scene, with first responders deployed with our gear,” Gregory Brown, Motorola Solutions’ chief executive officer, said in an interview. The company wants to add to that by helping emergency agencies, for example, collect and analyze video and social media to prevent potential crimes before they happen, Brown said.
Silver Lake managing directors Egon Durban and Greg Mondre will also join the board of Motorola Solutions when the deal closes, likely during the third quarter, the company said.
“They’re slowly going to take this company private,” said Keith Housum, an analyst at Northcoast Research in Cleveland. The Silver Lake investment lets Motorola invest in acquisitions and research without affecting its income statement, he said.
Patricia Graue, a spokeswoman for Silver Lake, declined to comment further on the announcement.
Motorola Solutions also said it would buy back as much as $2 billion of its stock at a price it hasn’t determined yet. The company reported second-quarter earnings, excluding certain items, of 68 cents a share, compared with the 54-cent average of analysts’ estimates compiled by Bloomberg.
The shares rose 6.3 percent to close at $64.04 in New York, the biggest one-day jump in more than four years. The stock has fallen 4.5 percent this year as the company expects sales to be flat or to fall slightly.
Motorola is, however, at the end of its restructuring process and has been hiring new employees, Brown said.
“The cost reductions are largely behind us,” he said. “It’s generally appropriately sized, it’s poised for operating leverage and now it’s about growth.”
The Silver Lake deal is a step in the right direction, but it’s too early to say what the long-term impact will be, Housum, the Northcoast Research analyst, said.
“This thing is probably stuck in the $60 to $70 range for a while,” Housum said. “We really need to understand more of this Silver Lake investment.”
Motorola failed to find a buyer among private-equity funds and industrial companies including Honeywell International Inc. and Tyco International Plc, people with knowledge of the matter said in April. It was too big a target for any single fund, one of the people said at the time.
“This confirms that there was definitely some truth to the rumor that there was no one willing to make the jump into them,” Housum said.