Motorola and Terayon Communication Systems announced on Monday that the two companies have signed a definitive merger agreement. Motorola will acquire all of the outstanding shares of Terayon’s common stock for US$1.80 per share in cash, with a total equity value of approximately US$140 million on a fully-diluted basis.

Terayon creates video processing solutions that optimize bandwidth and enable content to be delivered based upon the regional and local interest of viewers, accelerating the service provider’s ability to evolve and capitalize on new business opportunities.

"Operators around the world are looking for a digital video core that will maximize bandwidth and enable the delivery of revenue-generating services," said Dan Moloney, President of Motorola Connected Home Solutions. "The acquisition of Terayon will enhance Motorola’s end-to-end portfolio for the delivery of next-generation services such as targeted advertising and program insertion solutions."

"Through this proposed merger with Motorola, Terayon will be able to expand its reach and integrate our technology into a diverse set of video platforms," said Jerry Chase, CEO at Terayon Communication Systems. "Our customers can expect to experience the benefits of a more fully integrated video platform from an acknowledged industry leader."

Upon completion of the transaction, Terayon will become a wholly-owned subsidiary of Motorola and will be integrated into the Motorola Connected Home Solutions business. Motorola intends to maintain Terayon’s operations in Santa Clara, CA.