Motorola Sells Subsidiary in South Africa : Radio Equipment Unit Supplied Police, Army

Times Staff Writer

Motorola Inc., which has been strongly criticized by anti-apartheid campaigners in the United States for operating in South Africa and providing the police and army here with radio equipment, has sold its local subsidiary to a South African firm.

Motorola thus became the latest in a lengthening list of American companies to pull out of the strife-torn country.

Nigel Moon, the managing director of Motorola's South African subsidiary, said the sale Monday was prompted by business considerations and had been discussed on and off for seven years, but the move was viewed here as one of the most significant divestitures yet by an American company.

"There has been a fair amount of heat on Motorola in the United States of late," Moon said, "but there has long been an interest from Motorola's side and from various South African companies for an alliance. We see this as a very positive development."

Purchased by Altech

Motorola's manufacturing and distribution operation here was bought by Allied Technologies Ltd., or Altech, one of South Africa's major electronics companies. It will continue to produce two-way radios at Motorola's 250-man factory here and to sell and service Motorola products as a licensee and supplier.

Neither officials at Motorola's headquarters in Schaumburg, Ill., nor Altech disclosed terms of the deal, but local business sources estimate that Altech paid at least $2 million for the subsidiary, whose annual sales are estimated at $12 million to $15 million.

In financial terms, the deal is relatively small for both Motorola, whose worldwide sales last year came to about $5 billion, and for Altech, which reported sales last year of about $225 million at prevailing exchange rates.

Local business observers said they see the deal as allowing Motorola to remain in the South African market as a major supplier--and even to resume its highly profitable but very controversial sales to the police and military--but without the high exposure to criticism in the United States that a wholly owned subsidiary in South Africa has drawn in recent months.

'Escaped Difficult Position'

"Motorola is a big-name company, it was under growing pressure at home and it decided South Africa was not worth it," the managing director of another American firm in the electronics industry said, asking not to be identified. "While Motorola has escaped a very difficult position--in South Africa, the security forces have to be a principal customer--and Altech bought a good company cheaply, there should be serious concern. South Africa needs the capital, technology and management skills that foreign companies like Motorola put into their subsidiaries but not into licensees."

Although most of the 300 American companies operating in South Africa say they intend to remain, working for peaceful political, economic and social change, as many as 25 have pulled out this year, selling their operations to their South African partners and sometimes simply settling for whatever they could get. Those that have withdrawn in recent months include ITT, Phibro-Salomon, General Foods and International Harvester. Apple Computer has barred the sale of its products here, effective this month.

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