Motorola (MOT) is looking to sell its profitable home and networks mobility division, home to its cable set-top box unit, for $4.5 billion, the Wall Street Journal reports.
The division had $2 billion in sales last quarter, down 15% from a year ago. The operating profit was $199 million in the quarter.
This operating profit might be enough to interest a few private equity firms like TPG and Silver Lake Partners who are eyeing the company, according to the Journal.
With a run rate of almost $800 million in operating profit, that would mean the sale is only a 5X multiple, which seems cheap to us. We’re not sure if there’s debt, or something else in the deal. Or if it’s just a business in decline.
The Journal says the cash from the sale will be used to revamp Motorola’s flagging handset division. Over a year ago Motorola announced plans to spin out its mobile phone business. Those plans have been stalled. It’s unclear how this sale will affect the plans.