Motorola confirmed on Thursday that it planned to reorganize into two independent companies by the first quarter of 2011, with its mobile handset unit and its television set-top box division being combined and spun off as a separate publicly traded company.
The announced split is meant to finally divide Motorola into smaller, more focused operations, pulling apart the collection of often disparate businesses assembled over the years by the company, which is based in Schaumburg, Ill.
Sanjay Jha, one of Motorola’s two co-chief executives, will oversee mobile handsets and set-top boxes, effective immediately. The remaining operations — Motorola’s wireless networking business and its enterprise radio systems operations — will be headed by the company’s other co-chief executive, Greg Brown.
As envisioned by company executives, the split would create two independent companies, each of which accounted for roughly half of Motorola’s $22 billion in sales in 2009. The companies will be split through a tax-free stock distribution to shareholders. The mobile handset and set-top box business will own the Motorola brand and will license it royalty-free to the enterprise and networking company.
In an interview, Mr. Brown said the enterprise and networks business would assume Motorola’s debt, projected to be a little more than $3 billion at the time of the split. He said he expected the company would retain an investment-grade credit rating.
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