Motorola announced plans to split the company into two publicly traded entities. The handset division will be spun off into its own company and the other company will include broadband and mobility solutions. Motorola said it expects the separation to take place sometime in 2009. The separation will take the form of a tax-free distribution to shareholders, meaning shareholders will own shares in both companies.

The news sent Motorola shares up 6.4% in pre-market trading.

“Our decision to separate our mobile devices and broadband and mobility solutions businesses follows a review process undertaken by our management team and board of directors, together with independent advisers,” said Greg Brown, Motorola’s president and CEO, in a statement. “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.”

Brown also said that Motorola is searching for a new chief executive for the mobile devices business: “We believe strongly in our brand, our people and our intellectual property, and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company.”