Motorola will buy Terayon Communication Systems, a digital video processing and networking software maker, for $140 million (£69.9m), the companies announced.
The merger marks another move by Motorola to strengthen its high-definition video and networking technology. US-based Terayon make products that help cable operators transition from analogue to digital video.
One of Terayon's products, CherryPicker, allows cable operators to insert digital advertisements on different channels in their networks and manage how those ads are scheduled and billed. The company also has video processing products that help optimise bandwidth and deliver localised content to viewers. Other products deal with motion and graphical overlays and channel branding.
Motorola said Terayon's software will give it industry-recognised digital processing solutions for its video infrastructure.
Terayon will become a wholly owned subsidiary and integrated into Motorola's Connected Home Solutions business, which deals with high-definition video on internet protocol (IP) networks, among other areas. Terayon's headquarters will not move, Motorola said.
Motorola will buy all of Terayon's outstanding shares for $1.80 each in cash. The transaction, which is expected to close in the second or third quarter this year, is subject to regulatory approvals and approval from Terayon's stockholders.
Excluding amortisation and one-time transaction and accounting costs, Motorola said the acquisition should not affect its earnings per share in the first year following the closing.
Last month, Motorola completed its $39m (£19.5m) acquisition of Tut Systems, which sold systems for encoding, processing and distributing digital video.z