Motorola announced that it has reached an agreement to acquire Terayon Communications Systems. The transaction is valued at approximately $140 million.

Terayon is a company focused on creating video processing solutions that optimize bandwidth and enable content to be delivered based upon the regional and local interest of viewers. This can accelerate a service provider's ability to evolve and capitalize on new business opportunities.

The integration of Terayon and its software-driven application solutions will enhance Motorola's video infrastructure and mobility core by providing Motorola with video processing solutions that enable digital ad insertion, motion and graphical overlays, channel branding and channel line-up solutions, as well as ad insertion delivery technologies.

"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 of 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, which is expected to happen in the second or third quarter of 2007, 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, California.