After months of legal wrangles and delays from regulators, European vendor Nokia Siemens Networks (NSN) finally completed its US$975m acquisition of the Motorola Solutions networks business on 29 April.
On the following day, NSN took over responsibility…
After months of legal wrangles and delays from regulators, European vendor Nokia Siemens Networks (NSN) finally completed its US$975m acquisition of the Motorola Solutions networks business on 29 April.
On the following day, NSN took over responsibility for serving customers around the world using Motorola Solutions’s GSM, CDMA, WCDMA, WiMAX and LTE products and services.
The deal involved the transfer of responsibility for serving 50 operators in 52 countries to NSN. 6,900 former Motorola employees will move to NSN as part of the process. The European vendor will also be acquiring a set of R&D facilities in the US, China, Russia, India and the UK.
Motorola itself was demerged in January, with the former business and government communications arm becoming Motorola Solutions.
NSN declined to name its financial advisers for the acquisition of the Motorola network business, but did say that its legal adviser in the US was Skadden.
Motorola Solutions was advised by law firms Winston & Strawn and Baker & McKenzie.
Chinese regulatory obstacles
NSN’s announcement followed the news on 21 April that the Chinese Ministry of Commerce (MOFCOM) had given its unconditional approval for the acquisition.
It was the delay in getting approval from these officials that had forced NSN to put back the closure of the deal from its original target date in Q1 2011.
It is possible that Huawei’s difficulties in entering into the US market – where several of its deals have been aborted due to alleged national security concerns – could have contributed to the regulator dragging its feet on the Motorola-NSN deal.
There was also media speculation that the action was also some form of retaliation to a perceived snub by Motorola and NSN towards Chinese vendor Huawei – which had worked with Motorola for ten years prior to the NSN acquisition being announced in July 2010.
Huawei argued against the deal by claiming that it would involve Motorola transferring confidential Huawei intellectual property to NSN.
In February, Huawei won a preliminary injunction in a US district court, which prevented Motorola from trading Huawei’s intellectual property to NSN.
But on 13 April, Huawei and Motorola Solutions said that they had come to an agreement to settle all pending legal action between them.
Under the new agreement, Motorola Solutions will be able to transfer its commercial agreements with Huawei to NSN, as long as it pays Huawei an undisclosed fee.
The European vendor will also be able to use Huawei’s confidential information to service the networks that Motorola has deployed worldwide.
While the deal has a unique US-China political context, it also highlights a growing trend of vendors getting into legal battles over intellectual property.
A week before TelecomFinance went to press, Huawei and another Chinese vendor, ZTE, issued lawsuits against each other for alleged patent violations.
Focus on key markets
NSN claims that the acquisition of the Motorola assets will cement its position as the world’s second largest wireless infrastructure and services provider.
An NSN spokesman told TelecomFinance that the rationale for the deal centred around gaining customers in key markets, particularly in Japan and the US.
He added that the acquisition would bring market share in the areas of CDMA and WiMAX.
Jim Kelleher, an analyst at Argus Research, said that NSN was “less interested in Motorola’s technology and much more interested in its customer list”, particularly in the US.
It would enable NSN to increase its presence in the US in particular at a time when the company’s competitors there (Alcatel-Lucent and Ericsson) were also growing.
The US$975m that NSN is paying for the assets is a significant reduction from the original US$1.2bn price tag when the deal was originally announced in July 2010.
When asked why the price of the acquisition had been reduced to US$975m, the NSN spokesman said that the new price “reflected Motorola’s desire to obtain additional certainty that the deal would close”.
He added that the scope of the business being acquired by NSN had not changed since the original announcement.
Nonetheless , there has been speculation that the missing US$215m was paid by NSN to Huawei to get the deal through.
For its part, Motorola Solutions has also welcomed the completion of the deal.
The president and CEO of Motorola Solutions, Greg Brown, said that the sale would help the company “further sharpen our strategic focus on providing mission-critical solutions for our government and enterprise customers”.
