Motorola is the top bidder for Terayon Communication Systems, which for the past year or so has been widely considered the company most likely to be bought.
Motorola will acquire all of the outstanding shares of Terayon's common stock for $1.80 per share in cash. The transaction will have a total equity value of approximately $140 million, a little less than double Terayon’s preliminary calculation of 2006 sales of $76.4 million. Terayon’s annual revenue in 2005 was $90 million.
Terayon was founded to exploit its proprietary Synchronous Code Division Multiple Access (S-CDMA) technology in cable modems and CMTSs. S-CDMA was included as an option in DOCSIS 2.0, but Terayon ended up an also-ran in both markets, and ultimately it shut down both product lines.
Meanwhile, the company’s successful CherryPicker video processing products became the new foundation of a transformed Terayon. The company now specializes in digital ad insertion, motion and graphical overlays, channel branding and channel line-up solutions as well as cutting-edge ad insertion delivery technologies.
Failing in the CMTS and cable modem markets actually made Terayon a more inviting acquisition target for ARRIS, Cisco and Motorola (all three of which were said to have been interested in Terayon at one point or another), who already had those products in their portfolios and didn’t need or want duplicate lines.
Upon completion of the purchase, Terayon will become a wholly-owned subsidiary of Motorola and will be integrated into the Motorola Connected Home Solutions business. Motorola said it intends to maintain Terayon's operations in Santa Clara, Calif.