Motorola Plans To Buy The Rest Of Next Level

Motorola Inc. said Monday it plans to acquire the portion of Next Level Communications Inc. that it doesn't already own. But the Motorola subsidiary said it hasn't been for sale.

Motorola said it plans to offer $1.04 a share, or about $30 million in cash, for the remaining shares of the broadband communications equipment maker.

Motorola, which owns 74% of Next Level, said it doesn't need approval of Next Level's board for the acquisition and hasn't asked the company's board of directors to approve the offer or the merger. Motorola first acquired shares of Next Level in its December 2000 acquisition of General Instrument Corp., which became the core of Motorola's broadband communications sector, established in January 2001.

Motorola executives believe the acquisition will benefit Next Level while improving the financial strength and performance of Motorola's businesses.

"Reintegrating our Next Level subsidiary provides the talented Next Level team a financially sound base and broader resources to continue deploying industry-leading broadband-access platforms," Don McLellan, VP of mergers and acquisitions at Motorola, said in a statement. "At the same time, Next Level will avoid the escalating costs and management time spent reassuring customers and suppliers of Next Level's financial viability, seeking additional financing sources and remaining publicly traded."

Since December 2000, Motorola has provided Next Level with $175 million in funding and $30 million in financial guarantees. The subsidiary's stock increased 24 cents Monday, or 26.5%, to $1.15. The Motorola offer was a 14.4% premium over Next Level's closing price Friday and a 28.3% premium over the average closing price for the last 90 trading days. Next Level stock has a 52-week low of 56 cents and a high of $3.40. Motorola stock ended Monday's trading down 58 cents, or 5.8%, to $9.35.

In response to Motorola's plans, Next Level chairman and CEO J. Michael Norris said the company hasn't been for sale.

"Motorola has not discussed its unsolicited tender offer with management and the independent directors and, as indicated in Motorola's press release, is not asking the board to approve the offer," Norris said in a statement. "Management and the board intend to fulfill their fiduciary duties to the stockholders and will have further comment on the Motorola unsolicited offer when appropriate."

Motorola, a chip and telecom-equipment maker, reported sales of $19.1 billion for the nine months ending Sept. 28. Next Level, which designs and sells broadband communications equipment that integrates voice, high-speed data, and digital video services over copper telephone lines, has a market capitalization of $78.8 million.