Global technology investment company Silver Lake is making a new $1 billion investment in public safety and security firm Motorola Solutions. Silver Lake will also settle Motorola Solutions’ outstanding $800 million aggregate principal investment one year ahead of its maturity.
Under the terms of the new agreement, Silver Lake will purchase $1 billion aggregate principal amount of 1.75% convertible senior unsecured notes due 2024 using capital from a more recent fund to extend Silver Lake’s commitment and enable a longer hold period.
The 2024 Notes will have an initial conversion price of $203.50 per share, subject to customary anti-dilution and other adjustments. They will mature in September 2024, unless repurchased, redeemed, or converted earlier.
Midday Thursday, Motorola Solutions’ shares were trading at $174.52, down 2.4%. The shares have a 52-week high of $182.28.
In connection with the issuance of the 2024 Notes, Silver Lake and Motorola Solutions will settle an outstanding $800 million aggregate principal amount of 2.00% convertible senior unsecured notes due 2020.
Motorola Solutions will pay Silver Lake approximately $1.1 billion in cash and issue approximately 5.5 million shares, which is fewer then the second quarter diluted share count that assumed settlement of the full premium for the 2020 Notes in shares.
“The Silver Lake partnership has been outstanding, and I’m very pleased that we’re continuing it,” said Greg Brown, chairman and CEO of Motorola Solutions. “Our relentless focus on people, platforms, growth and shareholder return has proven to be very successful, and I’m excited about the opportunities we have in front of us.”
Egon Durban and Greg Mondre, managing directors of Silver Lake, will remain on Motorola Solutions’ board.
Goldman, Sachs & Co. acted as financial advisors to Motorola Solutions, and Wachtell, Lipton, Rosen & Katz served as Motorola Solutions’ legal advisor in the transactions. Simpson Thacher & Bartlett served as Silver Lake’s legal advisor.