Motorola has agreed to sell its Embedded Communications Computing (ECC) business to Emerson Electric for $350 million in cash -- a move that will enable Motorola to focus more intently and with strengthened financial resources on its ailing cell phone business.
In a statement issued Friday, the companies said: "For Motorola, the transaction sharpens its focus on its core business and technologies and provides additional capital to drive further growth and enhance shareholder value." The deal is expected to close by the end of the year.
The ECC unit was profitable for Motorola. The division recorded $520 million in revenue in 2006. The group manufactures embedded computing products and services to communication infrastructure and equipment makers in the telecommunications, medical imaging, defense and aerospace, and industrial automation industries.
Emerson indicated the acquisition will help its position in the $6 billion merchant embedded computing business. The Motorola unit, currently headquartered in Tempe, Ariz., will be merged into Emerson's Network Power unit. Some 1,100 employees are slated to move to Emerson in the transaction.
The deal will enable Ed Zander, Motorola's chairman and CEO, to focus more intently on Motorola's mobile phone business, which has been losing market share of late, particularly to Nokia.
"We regularly evaluate our company's portfolio to ensure alignment with our core vision and business strategies to enhance shareholder value," said Zander, in a statement. "We believe that Emerson has the proven track record to continue to serve ECC's customers with the same high quality and level of products and services."
Emerson CEO David Farr noted that the growth in wireless communications is driving long-term telecommunications market growth, and broadband applications are driving near-term wireline investments. He said the Motorola acquisition will strengthen Emerson's position in those markets.
"The combination of Motorola's ECC business with the $100 million embedded computing business we acquired as part of Artesyn last year establishes Emerson as a leader in the embedded computing industry," Farr said in a statement.
One benefit to Motorola's ECC customers is that both operations -- Motorola's ECC and Emerson's Network Power unit -- already promote industry standards Advanced Telecommunications Computing Architecture and Micro Telecommunications Computing Architecture. The companies believe the industry will continue to be attractive because those standards are increasingly being adopted by major telecom companies.