Motorola Solutions Inc. and Huawei Technologies Co. said Wednesday they have agreed to settle all pending litigation between the companies.
Huawei and Motorola had been partners under commercial agreements dating back a decade, with the Chinese company developing network technologies for Motorola that the Schaumburg-based company sold under its own brand. In July, Motorola announced it was selling its networks business to Nokia Siemens Networks for $1.2 billion. Huawei sued Motorola in January, saying the transaction would cause Huawei trade secrets to fall into the hands of Nokia Siemens, a major rival.
In February, a federal judge in Chicago barred Motorola from transferring confidential information to Nokia Siemens until the two sparring companies could resolve the issue in arbitration in Switzerland.
Huawei said Wednesday it will dismiss its lawsuit, with prejudice, against Motorola and Nokia Siemens, which had also been named in the suit. The companies will enter an agreement allowing Motorola to apply its old commercial agreements with Huawei to Nokia Siemens “for a fee,” the statement said. Under the agreement, Nokia Siemens can use Huawei’s proprietary information to service Motorola-deployed networks that will be transferred to Nokia Siemens’s care.
In a filing with the U.S. Securities and Exchange Commission made Wednesday, Motorola said it and Nokia Siemens have agreed to lower the $1.2 billion cash purchase price to $975 million.
“We regret that these disputes have occurred between our two companies,” Motorola Solutions Chief Executive Greg Brown said in a statement, referring to Huawei. He added: “After reviewing the facts, we decided to resolve these matters and return to our traditional relationship of confidence and trust.”
Also on Wednesday, Motorola has withdrawn its lawsuit with prejudice against Huawei, which it had sued in July 2010 for alleged theft of trade secrets. Huawei had been added as a defendant in a case Motorola had initially filed against several former employees and Lemko Corp., a Schaumburg technology formed by some of those employees.
“With the resolution of these cases, and the misunderstandings put to rest, Huawei is pleased to move forward with its efforts to provide innovative solutions to its customers,” Guo Ping, the company’s executive vice president, said in a statement.
About 7,500 Motorola employees are expected to go over to Nokia Siemens when the deal closes. However, the transaction still faces an important roadblock, as Chinese regulators are still conducting their review. Motorola and Nokia Siemens had initially targeted the first quarter of 2011 for closing the deal.
According to the regulatory filing, Motorola and Nokia plan to close the deal on April 29. Resolution of the Huawei legal disputes is a requisite for meeting this deadline, as is receiving approval from the Chinese anti-trust authority and making sure there are no other governmental or legal restraints that would prevent the deal from taking place.
If the closing conditions are not met, Nokia Siemens has until May 11 to pull out of the acquisition agreement, the filing said. If Nokia Siemens does not exercise its termination rights, the deal will close on May 27.