Motorola has acquired Symbol Technologies, a $3.9 billion deal opening a door into the enterprise for the second-largest wireless handset maker.

Motorola will pay $15 for each outstanding share of Symbol stock.

Symbol, which makes wireless handheld RFID barcode readers and rugged handhelds, becomes a wholly owned subsidiary of Motorola and a cornerstone of the handset company's Networks and Enterprise business, said the companies during a conference call.

The transaction "significantly advances Motorola's enterprise mobility strategy," Ed Zander, CEO of the Schaumburg, IL-based company, said in a statement.

While fewer than 5 percent of Motorola's customers are enterprises, almost all of Symbol's business involves the enterprise, Todd Kort, a Gartner analyst, told internetnews.com.

Kort said while Motorola has a couple of handheld contracts, including one with the U.S. Postal Service, "they've been treading water. This will really catapult them in the handheld business," he said.

During a conference call, Zander said the agreement, expected to be completed later this year or early 2007, is "buying the future."

Zander, in a statement, said Motorola and Symbol share the vision of a "digital, mobile world for enterprises that matches the world people enjoy at home and at play."

The combination will save Motorola $100 million by 2008 through eliminating duplication and expanding its customer base, according to the company.

Although some cost-cutting is planned, Zander said Motorola will retain Sal Iannuzzi, Symbol's president and CEO. The RFID firm's Holtsville, N.Y., headquarters will also be kept.

"This is about Motorola positioning itself as a player in the enterprise sector," Greg Brown, president of Motorola's Networks and Enterprise unit, told analysts this morning.

Zander said Motorola's Q phone will be pushed to enterprise customers, and Symbol, which employs Wi-Fi for its wireless barcode devices, could adopt WiMAX for inside and outside coverage.

Iannuzzi denied earlier reports Symbol was seeking a buyer. "There was absolutely no auction," Iannuzzi said. "Symbol wasn't put on the block."

Symbol's patent portfolio, including wireless RFID tag readers, could be the company's most valuable asset.

Symbol's technology could be embedded in Motorola phones enabling consumers to easily scan products, said Kort.

Although Symbol stock has been depressed and the company suffered some setbacks, including a 2003 accounting probe and the exit of its CEO, the symbol is still strong among retailers, he said.

Motorola is basically picking up the market leader, according to the analyst.

Story Courtesy of internetnews