Google Will Receive $2 Billion and $300 in Stock from Arris Deal

After closing the deal on its buy of Motorola Home just six months ago, Google sold the consumer video division to Arris Group late Wednesday evening in a $2.5 billion cash-and-stock package, making Arris one of the world’s largest set-top vendors. Rumors that Google would unload this struggling maker of cable set-top boxes have been in the mill since March, before Google’s acquisition of the property was even finalized.

Under the terms of Wednesday’s deal, Google will receive $2.05 billion in cash and $300 million in newly minted stock, giving it a 15.7 percent ownership stake in Arris upon the deal’s closure. Arris will gain access to the very attractive collection of Motorola Mobility patents.

Arris hopes the deal will give it broader capability in the realm of consumer video products and services and give a boost to its patent portfolio, much as Google hoped its acquisition of Motorola Home would as the tech juggernaut announced its intention to buy in late 2011. The deal has also made Arris group one of The Wall Street Journal’s stocks to watch and has boosted Google’s trading price slightly as of early Thursday morning.

This very move is what analysts expected ever since Google set out to acquire the cable box maker, as Motorola Android smartphones may fit into Google’s overall market strategy, but the home video market, on the whole, does not. Home video may be a line of business that delivers a solid cash base, but in the age of wireless products and digitization, it offers little growth.

Concerns that Arris would be left to foot the bill if a ruling comes back negative in the ongoing Moto-Tivo spat have also been assuaged, as Google will only require Arris to pay a small sum if Motorola is found to have infringed Tivo patents per a suit that was filed in late October.

Based in Suwanee Ga., Arris Technologies has acquired several cable technology companies within the past decade, to include Paul Allen’s Digeo, C-COR and BigBand Networks. The deal struck this week is the biggest the company has seen yet, bringing it to an even playing field with others in its field such as Cisco, Humax and Pace—the British technology firm that lost out on a deal with Google for Motorola Home by not offering a high enough buying price.

According to Arris chairman and chief executive, Bob Stanzione, the communications technology company looks forward to expanding its global reach through the purchase.

“Acquiring Motorola Home builds on Arris’s rich history, creating a global player with significant footprint, revenue and cash flow. It also adds expertise in video and a larger presence in the home to our core strengths in voice and data, ensuring we are even better positioned to capitalise on and manage the evolution toward multi-screen home entertainment.”

Arris also announced that it expects to generate $100 million to $125 million in annual “cost synergies” through the Motorola Mobility acquisition, but it failed to mention how worker layoffs or facility closures after the deal is finalized may play into that strategy.