With the economic bubble burst, many American companies are selling their non-core divisions in order, they say, to focus on the operations that are their mainstays.
This trend in turn has given LBO firms such as Los Angeles-based Platinum Equity “significant opportunities,” said the executive vice president of mergers and acquisitions at the firm, Johnny Lopez.
“From a buyer’s perspective, it’s a great time – it’s wide open right now. There are more quality opportunities as the (economic) climate [worsens],” he said.
The most recent of these opportunities for Platinum is its acquisition of Motorola‘s Multiservice Networks Division (MND), which the Schaumburg, Ill.-based communications/electronic services provider is divesting in order to focus on business areas “that are strategic to the company long term.”
Motorola sales in 2000 were $37.6 billion.
The sale of MND to Platinum is subject to customary regulatory approvals and other closing conditions, but the two companies expect the deal to be completed before the end of this year. Officials declined to disclose terms of the agreement.
Over the past 20 years, MND has emerged as a managed network solutions source, including network design, implementation, integration, and secure network operations and management to customers throughout the world. The company has 600 employees.
For Platinum, which calls itself a hybrid financial and strategic buyer specializing in the acquisition and operation of “mission critical” global technology companies, the acquisition of MND represents an expansion of that part of its portfolio that is in the managed network solutions sector.
“We have a significant initiative underway to grow our datacom portfolio companies, and integrate our networking solutions companies,” said Lopez. “Motorola is a significant complement to [these].”
For example, Platinum recently completed the acquisition of Williams Communications Solutions LLC, a Houston-based company, in a $1.4 billion transaction. The firm also created Nextira, the name it has given to the integrated operations of Williams Communications and Milgo Solutions, also part of its portfolio.
And in a deal not unlike that of MND, Platinum acquired CLARICOM, formerly Staples Communications, from the giant office product supplier this spring. Staples sold the division in order to focus on its core business. CLARICOM is an integrator of communications products and services, including software, voice, data and network solutions.
“We are continuing to build our presence in the network space and see the employees and customers of MND as important components in our continuing drive to create new value,” noted Tom T. Gores, Platinum Equity president and CEO, in a statement.
Platinum Equity’s current plans are to maintain MND’s headquarters in Mansfield, Mass.
Lopez said the acquisition of MND and the integration of the networking solutions companies will allow Platinum to “leverage customer relations and revenue.”
Brian Wall, director of business development at Platinum, added, “Another attractive quality [of MND] was its great customer base and the cross-selling opportunities the acquisition represents. The company also has a great management team.”
Lastly, Lopez said Platinum plans to grow MND and its other datacom companies both organically and through mergers and acquisitions.
Since Platinum’s founding in 1995, the company has completed more than 30 transactions with Fortune 500 corporations, including WorldCom, AT&T, Viacom, Dow Jones & Co. and IBM. Today, Platinum Equity has a multi-billion dollar revenue base.