Google and motorola merger

Google's Motorola Acquisition: A Case Study Ashish Varma The Genesis ranks in the smartphone space. OnAugust 15, Google (GOOG) announced an agreement to acquire Motorola Mobility (MMI), based in Libertyville, Illinois, for $40 per share or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies. The deal was not easy. It took Google significant effort to obtain regulatory approvals without conditions. This is a Vertical Merger (which companies at different places in a chain of products join together). Here, Hardware Client (Motorola) is acquired by the Software Client (Google). The Motorola acquisition equates to a third of Google's cash balance. Motorola recently reported an $86 million net loss for the first quarter, slightly higher than its loss for the same period last year. Total handset shipments declined from 9.3 million units to 8.9 million units. The silver lining is that smartphone shipments increased to 5.1 million from last year's 4.1 million units. Clearly, Google sees continued high potential in the smartphone market. Google's Android operating system has recently come under fire in an industry-wide patent battle, in which Android manufacturers HTC, Motorola, and Samsung have been sued for alleged patent infringement, by Microsoft, Oracle and Apple. The Motorola Mobility acquisition is considered a means of protecting the viability of Android. Google has stated that it will run Motorola as an independent company. On November 17, 2011, Motorola announced that its shareholders voted in favor of the company's acquisition by Google Inc. for $12.5 billion, receiving approval from the United States Department of Justice and the EU on February 13, 2012. The deal received subsequent approval from Chinese authorities and was completed on May 22, 2012 Why eye Motorola Mobility? Investors are wondering how an internet giant like Google can integrate with and run a hardware company that has been bleeding cash over the last few quarters. A quick answer is that Google can manufacture hardware in large quantities. Motorola was once a major mobile manufacturer. Its Motorola Razr model sold more than 100 million units. Looking at OEM market share data, Motorola holds a market share of 13.7%. This is down from the previous year's share of 20%. The company later decided to manufacture phones on the Android platform, which saw strong market reception based on its reviews. Therefore, Motorola has a fighting chance to move up the 61 Patent is just one of those investment merits of Motorola's acquisition. The acquisition of Motorola solidifies Google's position in the midst of its intellectual property battles. Google added 24,500 patents to its growing portfolio. Motorola Mobility has a long history of innovation in communications technology and the development of intellectual property. Its many industry milestones include the introduction of the world's first portable cell phone nearly 30 years ago, and the StarTAC–the smallest and lightest phone in the world when it was launched. On the other side, this also strengthens the position of Android as a mobile platform. The platform was in 56.1% of all smartphones sold in the first quarter this year.