Motorola will buy Terayon Communication Systems, a digital video processing and networking software maker, for $140 million, the companies announced on Monday.
The merger marks another move by Motorola to strengthen its high-definition video and networking technology. Terayon, based in Santa Clara, California, make products that help cable operators who are transitioning from analog to digital video.
One of Terayon's products, CherryPicker, allows cable operators to insert digital advertisements on different channels in their networks and manage how those ads are scheduled and billed. The company also has video processing products that help optimize bandwidth and deliver localized content to viewers. Other products deal with motion and graphical overlays and channel branding.
Motorola said Terayon's software will give it industry-recognized digital processing solutions for its video infrastructure.
Terayon will become a wholly-owned subsidiary and integrated into Motorola's Connected Home Solutions business, which deals with high-definition video on IP (Internet protocol) networks, among other areas. Terayon's headquarters will not move, Motorola said.
Motorola will buy all of Terayon's outstanding shares for $1.80 each in cash. The transaction, which is expected to close in the second or third quarter this year, is subject to regulatory approvals and approval from Terayon's stockholders.
Excluding amortization and one-time transaction and accounting costs, Motorola said the acquisition should not affect its earnings per share in the first year following the closing.
Last month, Motorola completed its $39 million acquisition of Tut Systems, which sold systems for encoding, processing and distributing digital video.