Motorola Accepts New $1.6bn Bid for Components Group.
Motorola said the components group, which designs and manufactures low-cost analog, logic and discrete standard parts, had sales of around $1.5bn last year, out of a total of $7.3bn for the Semiconductor Products Sector as a whole. Between 20% and 25% of that business went for Motorola's internal use - and that business will continue, according to Hector Ruiz, executive VP and president of the sector. The unit, which has very low profit margins, nevertheless returned to profit in the first quarter of this year, a quarter earlier than expected, said Ruiz. Motorola instigated a major restructuring of its semiconductor business last year, a process which has now been largely completed. It wants to concentrate on the more lucrative embedded systems market. Moto rola said it would continue to supply information technology services to the new company for the next year, to help with the transition.
Texas Pacific, based in Fort Worth and San Francisco, is a private investment partnership that specializes in acquisitions. It began talking to Motorola about the sale around nine months ago. Steve House, Motorola's senior VP and general manager of the components group will continue to run the business, and the present management team and employees will become employees of the new company. The components group is one of five business units formed in 1997. It is based in Phoenix, Arizona, and employs 10,000 people. Motorola said it expects the deal to be accretive.
Yesterday, a group of ex Motorola employees working under the name TFG Acquisition Corp, revealed that they had originally put in an offer to buy the components group on March 30. The improved their bid on Monday, claiming the offer was "genuinely superior to deals currently being considered".
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|Date:||May 12, 1999|
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