Google Originally Wanted To Buy Only Motorola Mobility's Patents - Multichannel

Google Originally Wanted To Buy Only Motorola Mobility's Patents

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Google originally approached Motorola Mobility in July about purchasing a chunk of its patent portfolio, but Motorola Mobility CEO Sanjay Jha told the Internet giant it could be "problematic" for the company if it sold off a large portion of its intellectual property, according a regulatory filing.

The companies then began discussing the acquisition of Motorola Mobility in its entirety, according to a preliminary proxy statement Motorola Mobility filed Tuesday.

Google first offered $30 per share for the mobile devices and cable technology firm, which Motorola Mobility rejected. The parties subsequently agreed on $40 per share, making the transaction worth $12.5 billion.

Google was concerned that its Android operating system or partners using the software would be the target of patent litigation by rivals, and was eager to obtain its own cache of intellectual property. In July, a consortium including Apple, Microsoft and Research In Motion teamed up to buy Nortel Networks' 6,000 patents for $4.5 billion.

In early July 2011, Andrew Rubin, Google's senior vice president of mobile, contacted Jha "to request a meeting to discuss the purchase by some of Google's competitors of the patent portfolio of Nortel Networks Corporation and its subsidiaries... and the possible impact of and potential responses to the purchase."

In a subsequent meeting, Jha told Google executives that "it could be problematic for Motorola Mobility to continue as a standalone entity if it sold a large portion of its patent portfolio."

On July 28, 2011, Jha discussed Google's potential acquisition of Motorola Mobility with David Drummond, Google's senior vice president of corporate development and chief legal officer. Google executives indicated that they were preliminarily considering a per-share price range in the "high $20s or low $30s."

Google sent a letter Aug. 1 to the Motorola Mobility board proposing an acquisition of Motorola Mobility by Google for $30 in cash per share. The board rejected the bid and later suggested Google increase its proposed price to $43.50 per share. 

On the morning of Aug. 15, Motorola Mobility and Google finalized the merger agreement at $40 per share in cash.

The deal includes an unusually high breakup fee. Google would pay Motorola Mobility $2.5 billion if it terminates their merger agreement while Motorola Mobility would owe the Internet giant $375 million if it accepted a higher takeover offer, according to regulatory filings.

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