Internet search giant Google has agreed to acquire Motorola Mobility for US$40 per share in cash, or a total of US$12.5bn, the companies announced this morning. The transaction offers a premium of 63% to Motorola Mobility’s closing price on Friday….
Internet search giant Google has agreed to acquire Motorola Mobility for US$40 per share in cash, or a total of US$12.5bn, the companies announced this morning. The transaction offers a premium of 63% to Motorola Mobility’s closing price on Friday. Advisers for the deal were not disclosed.
The transaction was enthusiastically welcomed by activist shareholder Carl Icahn, who said: “This is a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets.”
With the transaction Google also gets hold of Motorola Mobility’s substantial patent portfolio, comprising more than 17,000 patents and 7.500 pending patents.
Alison Hyde, technology fund manager at Cavendish Asset Management, commented that the patent portfolio seems to be “the key factor” for the transaction.
“Intellectual property – particularly with regard to wireless technology – has developed into a key battleground as tech companies scramble to position themselves to dominate the promising smartphone market, attested to by the recent slew of patent battles involving names such as Apple and Samsung,” said Hyde.
In a call with analysts, Google CEO Larry Page described the deal as “an extremely important event” for Google.
The company tried to immediately quell any potential antitrust concerns by stressing that Google’s smartphone operating system Android would remain open. Motorola Mobility will be run as a separate business unit, it was said.
Andy Rubin, senior vice president of mobile at Google, said in the conference call that he had spoken to the top five Android licensees yesterday, adding they all had shown “very enthusiastic support for the deal”.
But Ovum analyst Nick Dillon noted: “Google will move from the position of partner, to that of competitor to Android handset manufacturers, potentially placing significant strain on the Android ecosystem.”
And Dominic Sunneboof of Kantar Worldpanel ComTech, said: “Manufacturers who are reliant on Android are likely to be assessing their options, namely whether to put increasing weight behind Windows based smartphones, in an attempt to reduce reliance on Android in the wake of this tie up.”
An independent antitrust lawyer agreed that antitrust regulators might be interested in implications for other hardware manufacturers currently using Android. The question if Google might now have an interest to deny competing hardware manufacturers access to Android was a theory of harm that regulators might want to examine, he suggested.
Google said in a blog post that the “acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.
The transaction requires approval form US and European antitrust authorities and potentially regulators in other jurisdictions, the companies said. Motorola’s shareholders will also need to green light the transaction. Closing is expected in late 2011 or early 2012.
