SCHAUMBURG, Ill.-Motorola Inc. last week agreed to a management buyout of its Semiconductor Components Unit in a deal led by Texas Pacific Group, a private investment partnership that specializes in acquisitions.
Terms of the proposed transaction call for Motorola to receive about $1.6 billion in cash, notes and about 10 percent of the stock of the new company. Motorola said the transaction allows it to focus on extending its position in the embedded solutions market.
The components unit contributed about 21 percent, or $1.5 billion, to the Semiconductor Products Segment’s total 1998 sales of $7.3 billion.
“Recognizing that the embedded business and the components business are fundamentally different, with distinct technology, manufacturing, sales and customer requirements, we created this ownership structure in a way that provides optimal focus for both businesses and the ongoing support of our customers, partners and employees,” said Christopher Galvin, chief executive officer of Motorola.
Steve Hanson, senior vice president and general manager of the components group, will continue to lead the business as president, and the current SCG management team and employees will become employees of the new company.
The transaction is expected to close during the second half of this year and is subject to regulatory and other approvals, said Motorola.
Motorola said it expects the transaction to have a slightly negative impact on the company’s sales this year.
