Motorola agreed to acquire settop box supplier General Instrument (GI) on Wednesday for $11 billion in stock.
The proposed deal would unite the telecoms and semiconductor supplier with one of the US's major providers of cable TV conversion boxes to the home.
Christopher Galvin, Motorola's chairman and chief executive, said: "The merger of General Instrument with Motorola integrates the key technologies needed to bring the enormous potential of converged video, voice and data networking into the home."
He added: "This partnership will enable us to expand our portfolio for network access, delivering next generation solutions along with home hubs that will handle high speed Internet access and video entertainment as well as carrier quality voice services."
Edward Breen, GI's chairman and chief executive, will head a new Motorola business unit that focuses on integrated and interactive broadband access.
Motorola has agreed to exchange one GI share for each 0.575 of its shares, valuing GI at about $53.65 per share based on Motorola's closing stock price on Tuesday of $93.3125 - a small premium over the $50.50 GI closed at on Tuesday.
The merger is expected to close in the first quarter of 2000 and GI shareholders will own about 17 per cent of Motorola. GI's largest shareholder, AT&T's Liberty Media Group, which owns 20 per cent of the company, has agreed to vote in favour of the deal.
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