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Motorola may buy General Instrument

Updated:
Motorola may buy General Instrument

LOS ANGELES (AP) -- Motorola Inc. has begun talks to acquire
General Instrument Corp. in an all-stock deal valued at $9.5
billion, according to published reports.

A deal could be announced this week, the Los Angeles Times and
The Wall Street Journal reported today, citing unidentified sources
close to the potential transaction. The Journal said the deal was
valued at about $10 billion.

The partnership would bring together one of the best-known
consumer-electronic makers with the cable industry's top leading
provider of cable TV set-top boxes.

Sharon Corbitt, a General Instrument spokeswoman, said she was
aware of the published reports but declined to comment. Motorola
officials did not immediately return a phone call from The
Associated Press today.

Investors responded to the news by pushing Motorola's stock down
$4.061/4 to $94.561/4 in midmorning trading on the New York Stock
Exchange where General Instrument shares were up 871/2 cents at
$53.371/2.

Motorola, a top manufacturer of cellular phones, semiconductors,
high-speed modems and chips that drive cable TV converter boxes,
plans to capitalize on existing retail infrastructure with the
possible move. It would boost its position as a top cable industry
supplier, the Times said.

Motorola, of Schaumburg, Ill., would also gain a valuable
alliance in the emerging broadband market.

General Instrument, the biggest supplier of TV converter boxes
and a top maker of high-speed modems to the cable industry, would
acquire a partner for its retail distribution operation under the
proposed deal, analysts told the Times.

The Wall St. Journal said General Instrument's chief executive,
Edward Breen, was expected to keep his post as head of the company,
though it would become a unit of Motorola.

Since Motorola has high name recognition that outranks the
marketplace recognition of General Instrument, the Motorola name
would be used on General Instrument equipment, the Journal said.

Under terms of the proposed deal, General Instrument
stockholders would get slightly more than half of a Motorola share
for each of their common shares of General Instrument, according to
the Journal.

A strong partnership would come at a time when cable operators
have begun to sell their equipment at consumer electronic outlets.
Cable operators have already been selling high-speed access to the
Internet via a special modem that allows customers to use the Web
at speeds 100 times faster than they can now over phone lines.

The news follows months of takeover speculation on Wall Street
about General Instrument of Horsham, Pa. The plan could lead to a
consolidation among cable suppliers that would mirror the
concentration over the last year among the nation's cable
television operators, the Times said.

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