Motorola bypasses Next Level board with acquisition offer

Motorola has made an unsolicited offer for all the stock of broadband access equipment maker Next Level Communications it does not already own.

Motorola acquired 74% of Next Level’s outstanding stock in January 2000 as part of its purchase of General Instrument. With today’s offer Motorola hopes to acquire the remaining 26% for $30 million.

Motorola is offering $1.04 for each share of Next Level stock, which it says is a 14.4% premium over the company’s Friday closing price and a 28.6% premium over Next Level’s closing price over the last 90 trading days.

The offer is conditioned upon a majority of Next Level shares not already owned by Motorola being tendered and Motorola owning at least 90% of the outstanding Next Level shares as a result of the offer or through other actions. If the offer goes through, any shares not acquired will be purchased through an expedited “short form” merger at the same $1.04 per share price.

According to a Motorola spokeswoman, the acquisition of Next Level will allow for the development of new products and technologies without the distraction of financial pressures.

“Reintegrating the Next Level subsidiary into Motorola is expected to improve the financial strength and performance of their operations, which have formed part of Motorola’s consolidated results,” she said.

Despite making what would appear to be a reasonable offer, however, Motorola did not approach Next Level’s leadership with the proposal. Instead, Motorola said it intends to take the offer directly to shareholders and will not seek approval from Next Level’s board.

The Motorola spokeswoman declined to comment on the unorthodox approach of the offer, citing the need to confer with Motorola’s legal team.

A prepared statement from Next Level CEO J. Michael Norris indicated company leadership was surprised by the offer, and that it intends to play a role in any transaction that takes place. “Next Level has not been for sale… Management and the Board intend to fulfill their fiduciary duties to stockholders and will have further comment on the Motorola unsolicited offer when appropriate.”