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.