Motorola to split into two separate companies

By Lisa Kerner

Charlotte, N.C., March 26 - Motorola, Inc. said it began the process of creating two independent, publicly traded companies in a tax-free distribution to its shareholders as first announced in January.

The completion of any separation transaction is subject to certain customary conditions, including filing of required documents with the Securities and Exchange Commission.

"Our decision to separate our mobile devices and broadband & mobility solutions businesses follows a review process undertaken by our management team and board of directors, together with independent advisers," president and chief executive officer Greg Brown said in a company news release.

"Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus - as well as more targeted investment opportunities for our shareholders," Brown added.

Brown also announced that Motorola began a "global search" for a new CEO for the Mobile devices business.

In an open letter to Motorola's board on Wednesday, activist investor Carl C. Icahn called the split "much delayed and long overdue" but also said it was a step in the right direction.

Icahn voiced concerns about the speed with which a new management team will be selected for the mobile devices business as well as when the separation transaction would be completed.

"Time is of the essence and decisive action is required to reposition the mobile devices business for success as an independent company," Icahn's letter said.

Specifically, Icahn questioned why it will take until 2009 to accomplish the separation and wondered why it takes the threat of a proxy fight for the company "to make promises we all want to hear."

Icahn sought to set the record straight regarding his nominee to Motorola's board, Keith Meister. The investor questioned why Meister is not considered qualified to join the board and asked the board to meet with Meister.

It was previously reported that in November, Icahn suggested that Motorola split into separate companies: a mobile devices company, an enterprise mobility company, a connected home company and a company focused on mobile networks infrastructure.

More recently, Icahn upped his stake in Motorola to 6.3% with the purchase of some 28 million shares of the company's stock between Feb. 28 and March 5, it was reported in a schedule 13D filing with the SEC.

Motorola is a Schaumburg, Ill.-based communications company.

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