Motorola Snags Terayon

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Cable technology giant Motorola is acquiring video networking supplier Terayon Communication Systems for $140 million, broadening its offerings in digital advertising and program insertion equipment.

Under a definitive merger agreement signed by the two companies, Motorola will acquire all of the outstanding shares of Terayon’s common stock for $1.80 per share in cash, for a total equity value of approximately $140 million on a fully-diluted basis.

Upon completion of the deal, expected in the second or third quarter of 2007, Terayon will become a wholly-owned subsidiary of Motorola and will be integrated into the Motorola Connected Home Solutions business. Motorola intends to maintain Terayon’s operations in Santa Clara, Calif.

Terayon makes a variety of equipment designed to manipulate compressed video streams, including its "CherryPicker" video grooming system and a series of graphical processing applications that help cable, satellite and telcos operators deliver targeted advertising.

"Operators around the world are looking for a digital video core that will maximize bandwidth and enable the delivery of revenue-generating services," said Dan Moloney, President, Motorola Connected Home Solutions, in a statement. "The acquisition of Terayon will enhance Motorola’s end-to-end portfolio for the delivery of next-generation services such as targeted advertising and program insertion solutions."

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