Motorola to Buy Rest of Next Level Subsidiary

From Bloomberg News

Motorola Inc. on Monday said it plans to buy the shares of Next Level Communications Inc. that it doesn't already own for about $30 million in cash to protect its investment in the money-losing phone equipment maker.

Shares of Rohnert Park, Calif.-based Next Level rose 34% on news of the unsolicited tender offer. Motorola, which owns 74% of Next Level's outstanding shares, plans to offer $1.04 for each remaining share, 14% more than Next Level's closing price Friday, Motorola said.

Schaumburg, Ill.-based Motorola, the world's second-largest maker of mobile telephones after Finland's Nokia Corp., acquired the Next Level shares in January 2000 when it bought television set-top box maker General Instrument Corp. Since then, the value of the stake has declined 99%, Motorola spokeswoman Jennifer Weyrauch said. Next Level hasn't reported a profit since it first sold shares to the public in November 1999 at $20 each.

"Reintegrating the Next Level subsidiary into Motorola is expected to improve the financial strength and performance of Next Level's operations, which have formed a part of Motorola's consolidated results," Weyrauch said.

Shares of Next Level closed up 31 cents to $1.22 in Nasdaq trading Monday. The stock had declined 71% in the last year.

Next Level, which makes equipment used to deliver video and high-speed Internet connections over phone lines, said in a statement it hasn't been for sale. Motorola said the planned transaction does not require Next Level's approval.

Next Level had a third-quarter loss of $20.5 million, or 26 cents a share, as sales tumbled 39% from a year earlier.

Motorola shares fell 48 cents to $9.45 Monday on the New York Stock Exchange. They have declined 35% in the last year.

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