Ahead of the Bell: Motorola to Split

"Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus, as well as more targeted investment opportunities for our shareholders," Greg Brown, president and chief executive, said in a release.

According to terms of the separation, currently planned for 2009, current Motorola shareholders will receive a tax-free distribution ultimately resulting in them holding shares of both new companies, the company said.

The announcement comes just under two months after Motorola said it would explore strategic alternatives for its mobile business.

Shares of the Schaumburg, Ill., company rose $1.22 cents, or 12.5 percent, to $10.98 in premarket trading Wednesday.