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Motorola, Inc. (NYSE: MOT) and Tut Systems, Inc. (Nasdaq: TUTS) today announced that the two companies have signed a definitive merger agreement, under which Motorola will acquire all of the outstanding shares of Tut Systems common stock for $1.15 per share in cash. The transaction has a total equity value of approximately $39 million on a fully-diluted basis.

Tut Systems provides carrier-class end-to-end digital video encoding, processing and distribution products. Their solutions support MPEG-2 and MPEG-4 AVC video compression, local ad insertion, forward error correction, and real-time conditioning of video and audio. Today, more than 160 service providers worldwide deliver IPTV powered by Tut Systems digital video distribution technology.

The integration of Tut Systems’ solutions with Motorola’s industry-leading digital video delivery solutions will expand Motorola’s ability to help service providers deploy advanced video services over IP, ATM, or RF-based network architectures. Motorola currently has deployed 2060 digital video networks and over 50 million digital video set tops worldwide.

“This transaction brings together the telco-aware IPTV processing capabilities of Tut Systems with Motorola’s proven video delivery expertise. Together, our combined portfolio will provide service providers with next-generation solutions for delivering rich video experiences into the connected home – and out into the world,” said Dan Moloney, President, Motorola Connected Home Solutions. “”We look forward to adding the great people, technology and video expertise of Tut Systems to the Motorola Connected Home Solutions team.”