Comcast Buys a Stake in Arris

Editor's note: A previous version of this article incorrectly stated that Cisco Systems, not Google, owns Motorola's set-top cable-box business. The Fool regrets the error.

On Monday, Arris Group (NASDAQ: ARRS  ) announced a significant change in course in its grand plan to buy the Motorola set-top cable-box business from Google (NASDAQ: GOOGL  ) . Namely, Arris will sell 10.6 million shares of its common stock to Comcast (NASDAQ: CMCSA  ) -- a major customer, and user of Motorola cable boxes.

In return for the shares, Arris will receive $150 million cash from Comcast. More importantly, though, because of provision contained in its purchase agreement with Google, Arris' deal to sell shares to Comcast reduces Google's obligation to take shares from Arris in payment for Motorola Home, and at a 1-to-1 ratio. In lieu of half the shares it originally promised to Google, Arris will hand over an additional $150 million cash instead.

The upshot is that when all deals have been completed and Motorola Home moved to new ownership, Comcast and Google will each own 7.85% of Arris' shares outstanding, rather than Google with 15.7% and Comcast with none. Meanwhile, Arris ensures that two key partners have a vested interest in the success of its business.

Arris shares closed down 0.1% ahead of the news, at $15.34. Comcast shares closed up 1.2% at $38.92.

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  • Report this Comment On January 14, 2013, at 7:50 PM, lynmar79 wrote:

    ARRS is making all the right moves to grow revenues and profits. This is another fantastic deal which will reward ARRS and its's shareholders. Stay long and prosper.

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