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Why Motorola just got a $1 billion investment from Silver Lake

Motorola Solutions Inc. (MSI) is getting a $1 billion injection of capital from private equity house Silver Lake, as it looks to broaden its range of products and services beyond the radios used by emergency services such as police and fire departments.

The investment is another new chapter in Motorola’s reinvention since being forced into selling its struggling mobile phone business in 2008 by activist investor Carl Icahn. CEO Greg Brown told The New York Times that he wants Motorola to provide all the information that is “tactically useful” to workers in an emergency situation. That means adding more complex software and other data services to Motorola Solutions’ capabilities, the NYT said.


Silver Lake, which has around $26 billion in assets under management, specializes in investing in technology companies: it contributed to Michael Dell’s buyout of his company in 2013 and is a long-term investor in chipmaker Avago Inc. (AVGO), which swallowed rival Broadcom for $37 billion earlier this year.

Egon Durban and Greg Mondre, two of Silver Lake’s top managers who will join Motorola’s board as a result of the transaction, said in a statement that: “Motorola Solutions is an iconic company and the global market leader in public safety technology. We believe it is creating a new era in data-rich public safety communications and has significant potential for growth.”

Silver Lake will make its investment in the form of convertible notes. These are debt instruments that initially pay 2% a year, but Silver Lake will be able to convert into Motorola shares at a price of $68.50, a premium of just under 14% to Tuesday’s closing price. Motorola also announced today it will buy back up to the same amount of stock from the open market, using the cash already on its balance sheet and some of the Silver Lake money.