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Motorola in Talks to Acquire Airwave Solutions for $1.6 Billion

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Strengthening software and services business

In August 2015, Motorola Solutions (MSI) announced that it is in advanced talks to acquire UK-based emergency service mobile network owner Airwave Solutions in a deal worth approximately $1.6 billion. This Airwave acquisition will complement Motorola’s offerings for public safety personnel and networks and also lower the company’s dependence on hardware. As noted in the previous part of this series, Motorola has stated that it will look to use Silver Lake’s investment to “accelerate growth in its smart public safety solutions and services businesses through new partnerships, investments, and acquisitions.”

As seen in the below chart, services revenues have declined 1% YoY, or year-over-year, from $506 million in 2Q14 to $501 million in 2Q15. This acquisition is expected to add to revenues in the services business segment.

One possible hindrance to the deal is Airwave’s complex shareholder structure. Airwave Solutions is controlled by Australian bank Macquarie. T-Mobile (TMUS), another firm in the telecom space, is looking to acquire Dish Network (DISH) in order to benefit from low-band spectrum.

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UK-based companies attracting investments

The acquisition of Airwave Solutions will help Motorola cement and strengthen its software and services business. This acquisition news comes on the heels of Motorola’s announcement of Silver Lake’s $1 billion investment. In 2015, companies based out of the United Kingdom are attracting a lot of investment and acquisition buyouts from American counterparts. US companies have been aggressively acquiring UK-based companies, with close to $96 billion spent in acquisitions to ensure long-term growth and better return on investments.

You can gain exposure to Motorola Solutions by investing in the Technology Select Sector SPDR Fund (XLK) and the iShares U.S. tech ETF (IYW). Motorola accounts for 0.35% of XLK and 0.39% of IYW.

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