Google acquires. later divests Motorola Mobility (wireless devices/patents)
Companies in Relationship
, Motorola Mobility
Initial Announcement Date:
Consideration: $12.4B in cash; the preliminary valuation for acquired assets includes allocations of $2.9B to cash, $5.5B to patents/developed technology; .7B to customer relationships, .8B to other net assets, and $2.5B to goodwill. (Source: Google 10K)
Google announced an agreement to acquire Motorola Mobility for $40 per share in cash, or a total of about $12.5 billion, at a premium of 63% over the previous closing price of Motorola Mobility shares. Motorola’s product portfolio includes converged mobile devices such as smartphones and tablets, wireless accessories, end-to-end video and data delivery, and management solutions, including set-tops and data-access devices.
The acquisition of Motorola Mobility, which is a dedicated partner to Google within the Android ecosystem, is expected to substantially augment Google’s thin patent portfolio of about 2,000 patents, increasing it to approximately 20,000. With another 7,500 Motorola patents awaiting approval, the acquisition will enable Google to better defend itself against more fundamental IP attacks, and gain additional leverage in global patent negotiations and litigation. The transaction also allows Google to enter the handset business in a big way, attempting tighter hardware/software integration, which has so long been a key competitive advantage for Apple. Potential concerns however remain on the impact of the transaction on existing Android OEMs, who may now view Google as a competitor and therefore opt towards Windows or perhaps their own software strategies, thereby disrupting the Android ecosystem.
With more than 150 million Android devices now activated worldwide through a network of about 39 manufacturers and 231 carriers in 123 countries, the potential for capturing market share and enhancing the Android network remains huge for the newly merged entity.
Further, the acquisition of Motorola Mobility, which is the largest set-top box manufacturer in the world, may help Google’s efforts relating to Google TV, which has not gone off with a great start. Motorola’s scale in the set-top box market along with its key supplier relationships with the largest cable companies could kick-start Google’s growth in the living room, as it progressively becomes Internet connected through set-top boxes.
February 2012 -- Google won EU and U.S. antitrust approval to purchase Motorola Mobility for $12.5 billion with regulatory authorities claiming that the specific transaction is not likely to significantly modify the market situation with respect to operating systems and patents for mobile devices. Google is currently awaiting regulatory clearance in China, Taiwan and Israel.
May 2012 -- Google has selected Dennis Woodside to replace Motorola Mobility CEO Sanjay Jha as the head of the acquired business.
December 2012 -- Google will sell Motorola Mobility's home division to Arris for $2.35 billion.
March 2013 -- Google will eliminate 1,200 jobs or 10 per cent of workforce of Motorola Mobility. This new round of cuts follows on the heels of a layoff involving 4,000 jobs six months earlier.
January 2014 -- Google plans to sell Motorola Mobility to Lenovo for $2.9B. Google will receive $660 million in cash, $750 million in Lenovo shares and a three year note worth $1.5 billion. Google will retain key patents acquired in the original deal. With this semi-graceful exit, Google will receive a boost to its bottom line and potentially achieve improved relationships with hardware partners such as Samsung that use Android mobile operating system.
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