$3.5B Bet on Businesses Wanting to Track Assets and Employees

  • Published on: April 16th, 2014

Zebra Technologies Corp. (ZBRA) is buying a unit of Motorola Solutions Inc. (MSI) for $3.45 billion, borrowing most of the amount for a bet on mobile-computing services for businesses that need to track employees and products.

Zebra plans to fund the deal with about $200 million of cash and $3.25 billion in new debt. That’s almost as much as Zebra itself is worth, based on yesterday’s closing stock price, which valued the company at about $3.4 billion.

Both companies offer bar-code scanning, radio-frequency identification and other technology that companies can use to control their inventory, whether it’s retailers stocking shelves or hospitals recording doses of medicine. Motorola also has specialized tablets and computers for various industries.

“For Zebra, this is an opportunity to bundle additional products into the portfolio they already offer their customers,” said Tavis McCourt, an analyst with Raymond James Financial Inc.

Zebra joins companies from Intel Corp. to Nvidia Corp. in investing in technology for the market known as the Internet of Things, where objects with sensors are connected online and can be moved or altered based on their location and conditions.

“Motorola does not have the enterprise focus or creativity to compete with tablets and iPhones — I think Zebra does,” said Michael Genovese, an analyst at MKM Partners. “This is a good transaction from that perspective.”