Terayon Communication Systems Inc. (Pink Sheets: TERN.PK) has finally ended months of speculation as to its possible sale. The company announced on Monday that Motorola Inc. (NYSE: MOT) will acquire it for $140 million, at $1.80 a share. This is less than both the earlier estimates, which predicted a sale at $4 a share and the stock price of $1.84 on the day of the announcement. The news sent Terayon down 6% to $1.73. The company reached a high of $138.80 (adjusted for a stock split), back in March 2000.
Terayon, which provides real-time digital video networking applications to cable, satellite and telecommunication service providers, was founded in 1993 by the chairman Zaki Rakib and his brother board member Shlomo Rakib, who each own 5.5% of the company. Each will receive $7.7 million following the sale. Terayon's largest shareholder Kern Capital, which owns 16% of Terayon, will receive $20.8 million.
Motorola said that Terayon will provide it with video processing solutions that enable digital ad insertion, motion and graphical overlays. The company will become a wholly-owned subsidiary of Motorola and will be integrated into its Connected Home Solutions business. The deal is subject to shareholder and regulatory approval and is due to close in the second or third quarter of the year.
Terayon CEO Jerry Chase said, "Through this proposed merger with Motorola, Terayon will be able to expand its reach and integrate our technology into a diverse set of video platforms. Our customers can expect to experience the benefits of a more fully integrated video platform from an acknowledged industry leader."
Published by Globes [online], Israel business news - www.globes.co.il - on April 25, 2007
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