Business: Google Pays 63% Premium for Motorola Shares



google-motorola-nexus

google-motorola-nexus

Google and Motorola announced the merger between themselves on 15 August, after intense negotiations that saw Google paying a 63% premium over the actual costs of Motorola shares in the market.

Google Seeks Technology Boost

On 1 August, Google announced its intentions to offer $30 for every Motorola Mobility Holdings, Inc share. The internet giant is seeking to expand its market in the mobile handset and hardware areas, and plans to accomplish this goal through Motorola’s extensive patent portfolio.

The Motorola bid came just after Google lost out on a patent bid from a company called Nortel, which were won by a consortium that includes Google’s biggest competitors in the hardware game: Apple and Microsoft.

Two Weeks, $12.5bn

Between the first and the fifteenth of August, one of the largest and most powerful companies in the world paid a whopping one-third more during a merger than originally offered.

The credit for this goes to tough action on the Motorola side, chief among them Frank Quattrone’s Qatalyst Partners, the firm advising Motorola during the two weeks of negotiations.

Quattrone suggested that Motorola reject Google’s $30 per share bid, and instead ask for $43.50. Google answered this with a counter-offer of just $37 per share.

Motorola’s CEO Sanjay Jha rejected this bid as well, saying that he recommended Motorola only take a bid of $40.50 or higher.

In response, google offered $40 dollars that same day, with the stipulation that they are allowed to begin due diligence and announce the merger by 14 August.

As announced on 15 August, the companies eventually agreed on Google’s $40 per share bid, making Google’s offer rise 33% to a total of $12.5 billion to acquire Motorola and their massive patent collection.

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