Summary
Motorola Solutions, Inc. (MSI) has announced a significant strategic transaction with Silver Lake, a leading technology investment firm. The company entered into an investment agreement to issue $1 billion in principal amount of 2.0% unsecured convertible notes due 2020 to Silver Lake. This transaction is expected to close on August 25, 2015, and will provide MSI with substantial capital. In conjunction with this investment, Motorola Solutions also announced its intention to launch a modified "Dutch auction" tender offer to repurchase up to $2.0 billion of its common stock. The capital raised from Silver Lake will be used, in part, to fund this share buyback program, indicating management's confidence in the company's value and commitment to returning capital to shareholders. The agreement also includes board representation for Silver Lake, with two managing partners to be appointed to MSI's Board of Directors, signifying a potential for strategic guidance and oversight from a sophisticated investor.
Key Highlights
- 1Motorola Solutions secures a $1 billion investment through the issuance of 2.0% unsecured convertible notes due 2020 to Silver Lake.
- 2The company plans to launch a $2.0 billion modified "Dutch auction" tender offer to repurchase its common stock.
- 3Proceeds from the Silver Lake investment will partially fund the planned share buyback program.
- 4Silver Lake will gain board representation with two managing partners appointed to Motorola Solutions' Board of Directors.
- 5The convertible notes are convertible into cash and, at MSI's option, shares of common stock at an initial conversion price of $68.50 per share.
- 6The transaction includes customary covenants, standstill agreements, and conversion/transfer restrictions for Silver Lake.
- 7The company also announced its financial results for the quarter ended July 4, 2015, alongside this strategic investment.