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Motorola Solutions, whose shares were up 5 percent in premarket
trading, also said it planned a $2 billion buyback.
The investment is one of the largest ever by Silver Lake, which
led a $24.9 billion deal to take Dell Inc private in 2013.
The private equity firm will buy $1 billion of convertible
senior notes due 2020 with an initial conversion price of $68.50
per share, Motorola Solutions said on Wednesday.
Silver Lake will also get two board seats when the deal closes.
The board currently has eight members.
Motorola Solutions said it expected the investment to boost its
business that includes video monitoring, data analytics and
content management for "smart policing".
The business accounted for 3 percent net sales of the company's
services unit, which in turn represented 35 percent of overall
net sales in 2014.
"It shows Silver Lake does value MSI as a great strategic asset,
not the ex-growth declining assets some observers described
recently," Bernstein analyst Pierre Ferragu said.
Raymond James analyst Travis McCourt said the funds from Silver
Lake could also be used to make strategic acquisitions.
Motorola Solutions - unrelated to cellphone and set-top box
maker Motorola Mobility, now owned by China's Lenovo - has been
cutting costs aggressively in the face of sluggish sales.
The company's major customers include police and fire
departments as well as other government agencies whose budgets
have been squeezed in recent years.
Bloomberg reported in April that the company had failed to find
a buyer after putting itself up for sale.
Goldman Sachs & Co and J.P. Morgan are financial advisers to
Motorola Solutions, while Wachtell, Lipton, Rosen & Katz was
legal adviser. DBO Partners was financial adviser to Silver
Lake, and Simpson Thacher & Bartlett was its legal adviser.
Motorola Solutions' net sales fell 1.8 percent to $1.37 billion
in the second quarter ended July 4.
Net income attributable to the company fell to $142 million, or
68 cents per share, from $824 million, or $3.22 per share,
reflecting the divestiture of the company's enterprise business
in October. Net income from continuing operations rose to 72
cents per share from 30.
Up to Tuesday's close of $60.22, the company's shares had fallen
about 10 percent this year.
(Reporting by Devika Krishna Kumar in Bengaluru; Editing by
Saumyadeb Chakrabarty and Ted Kerr)
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