What is the primary purpose of this acquisition for Motorola Solutions?

The primary purpose appears to be the strategic expansion of Motorola Solutions into the UK public safety communications infrastructure market by acquiring Airwave Solutions Limited, a significant operator in this sector. The acquisition also serves to deleverage the acquired entity by paying off substantial debt.

What is the total financial commitment from Motorola Solutions for this acquisition?

Motorola Solutions' financial commitment involves a nominal purchase price of £1.00 for the shares, plus a substantial cash investment expected to be around £700 million. This investment is primarily to clear existing liabilities and fund operations.

What are the key conditions that need to be met for the deal to close?

Key conditions include obtaining consent from Airwave's material customers (mainly government agencies) for the change of control, the release of performance guarantees provided by the seller, and the resolution of existing disputes with government agencies regarding contracts. Additionally, a court order sanctioning a scheme of arrangement to release liabilities under the credit agreement is required.

What are the risks associated with this transaction for Motorola Solutions?

The primary risks lie in the satisfaction of the Buyer SPA Conditions, particularly obtaining consent from government agencies and resolving contract disputes. Failure to close by March 31, 2016, due to the Buyer failing to satisfy these conditions, could result in a £35 million reverse break fee. There's also the potential for claims exceeding the £8.175 million escrow amount, up to £200 million, which would be covered by insurance.

MSI 8-K: Material Agreements & Regulation FD

Summary

Motorola Solutions, Inc. (MSI) has entered into a Share Purchase Agreement to acquire Guardian Digital Communications Limited, the parent company of Airwave Solutions Limited, for a nominal sum of £1.00. This strategic acquisition involves a significant cash injection by MSI, with an expected net investment of approximately £700 million, which will be used to discharge substantial liabilities of the target company, including a credit agreement worth over £736 million. The transaction is expected to close in the first quarter of 2016, contingent upon several conditions, including customer consent from government agencies and the resolution of disputes related to Airwave's contracts. This move appears to be a strategic expansion for Motorola Solutions into the UK public safety communications infrastructure sector.

Key Highlights

1Motorola Solutions to acquire Guardian Digital Communications Limited (parent of Airwave Solutions) for £1.00.
2Significant investment of approximately £700 million by Motorola Solutions to inject capital into the acquired entity.
3Acquisition will facilitate the discharge of over £736 million in liabilities under a specific credit agreement.
4Transaction is subject to customary closing conditions, including customer consent from UK government agencies.
5An escrow amount of £8.175 million will be held for twelve months to cover potential claims.
6Motorola Solutions will also purchase insurance to cover claims exceeding the escrow amount, up to £200 million.
7Completion is anticipated in the first quarter of 2016.

Motorola Solutions, Inc. 8-K Report, Material Agreement (Dec 3, 2015)

Summary

Key Highlights

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