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19 June 2012

Motorola buys up Psion

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This week (18 June 2012) has seen an intriguing development in the ruggedised computing sector with the news that Motorola Solutions has agreed a cash offer with the directors of rugged mobile computer manufacturer Psion.

The offer values the company at £129 million (US $200m) and at 88p per share – a premium of 45 per cent on the 60.5 p share price in June, and a 66 per cent premium on the average six-month share price in 2012.

Motorola owns 9.99 per cent of Psion shares, and has irrevocable commitment from a further 16.88 per cent of Psion shareholders to sell their shares. The deal is expected to be completed by the end of 2012.

Psion has long been a pioneer in mobile computing. Back in 1980 it more or less invented the very concept of the PDA, and since it acquired the Canadian-based Teklogix rugged computing business in 2000 it has continually introduced innovative technologies, including speech and RFID.

It is listed on the London Stock Exchange, but its main operating centre is near Toronto, Canada. The company has approximately 830 employees and reported revenues in 2011 of £176 million (US $273 million).

Motorola Solutions says it expects to realise cost and revenue synergies through what might be termed "margin expansion opportunities". Greg Brown, chairman and CEO of Motorola Solutions, said: "Psion is a compelling opportunity to strengthen our industry-leading, mobile-computing portfolio with ruggedised handheld products and vehicle-mount terminals that will deepen our presence in the global markets in which we compete."

John Hawkins, chairman of Psion, said: "Psion continues to deliver successfully on its strategy of introducing exciting new products while strictly managing the cost base. The offer by Motorola Solutions provides Psion’s shareholders with certainty in an environment where certainty is in short supply."

There is considerable overlap of products between the two brands, so there are some obvious synergies in terms of market focus. Logically, parallel models from the two organisations will remain in production for some time to come, though when it comes to a model refresh, it is likely in most cases that a single replacement will emerge.

Equally interesting to follow will be Motorola Solutions’ plans for Psion’s Open Source Mobility business model. Psion was the first rugged computer manufacturer to adopt such a scheme, which is aimed at developers, partners and customers.

Omnii is the company’s modular platform for products, while IngenuityWorking.com is said to offer partners and customers a platform to collaborate to develop products and services at a faster rate and with lower costs than in the past.

Product interfaces are published in an open-standards format, and the community itself tests and validates products. Final assembly of hardware is done by channel partners, shortening lead times potentially offering wider choice of end-configuration which will help tailor solutions to specific needs. Components can be swapped during the life of the device, reducing the risk of obsolescence.

Structurally Psion will become part of Motorola Solutions’ Enterprise Mobile Computing business, reporting to Girish Rishi, corporate vice president, EMC.

Just how long the iconic Psion brand name will continue to be used is not yet clear, but history shows that acquired businesses like this lose their identity quite quickly. Five years ago, Symbol was a colossus in the rugged handheld computer market, but then Motorola acquired it, and now it is little more than a memory.


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