Google May have Offered to Buy Just Motorola's Patents in Early Negotiations
Published on: 14th Sep 2011
Note -- this news article is more than a year old.
Motorola Mobility has unveiled more information about the Google takeover and it is clear from the documents that Google was primarily interested in Motorola's patents, despite its claims to the contrary.
According to a SEC filing, Google first approached Motorola Mobility in early July after it lost out in the Nortel patent auction and wanted to discuss how the two companies would be affected by the loss of the Nortel patents to competitors.
The parties discussed the impact of the Nortel auction, intellectual property litigation and the potential impact of such litigation on the Android OS, Motorola Mobility's patent portfolio and potential strategic options relating to the Motorola Mobility patent portfolio and Motorola Mobility, including the potential sale of Motorola Mobility to Google.
Although not explicitly stated, it is clear that Google must have discussed the possibility of buying just the patents from Motorola, not the entire company. At a later meeting Motorola replied to Google, stating that "it could be problematic for Motorola Mobility to continue as a stand-alone entity if it sold a large portion of its patent portfolio." If Google hadn't offered to buy only the patents, why was Motorola Mobility warning them about the problems such a sale would cause?
On July 28, 2011 Google discussed a full takeover of the entire company and their representatives indicated that they were preliminarily considering a per share purchase price range in the high $20s or low $30s.
On August 1, 2011, Google sent a letter to the Motorola Mobility Board of Directors proposing an acquisition of Motorola Mobility by Google for $30 per share in cash.
From August 2 through August 5, 2011 in negotiations, Google indicated that it was willing to improve the terms of its proposal but reiterated that Google's proposal must be kept confidential and that a response must be received quickly.
Evidently realizing that Google was both keen to do the deal, and concerned about doing so quickly, Motorola Mobility held out for a better offer.
Motorola Mobility proposed an offer at $43.50 per share, which was countered by a raised offer of $37 per share from Google. Motorola responded by seeking $40.50, and both parties finally settled at $40 per share.
Considering how they had managed to push up the price so dramatically in just a few days, Motorola accepted the offer, and the condition that they do not seek any counter-bids from other firms.
All that is needed now is for the shareholders to agree to the takeover, but considering the premium being wrung out of Google it is inconceivable that they would reject the bid.
On the web: SEC Filing