Google bumped up Motorola offer by $3 billion

Motorola Mobility provides negotiation details in an SEC filing, giving the play-by-play of what went down before Google and Motorola agreed to a $12.5 billion deal.

Google upped its original offer to acquire Motorola Mobility by 33 percent, or about $3 billion, according to regulatory documents filed yesterday.

Last month, Google announced it had signed a deal to acquire Motorola Mobility for $12.5 billion .

According to a Motorola filing with the Securities and Exchange Commission, Google senior vice president of mobile, Andy Rubin, contacted Motorola Mobility Chief Sanjay Jha in early July to discuss possible responses to the recent $4.5 billion purchase by Microsoft, Apple, RIM, and others, of Nortel Networks' patent portfolio .

Google's behind-the-scenes reaction to the patent auction seems to follow what the company has said publicly. In announcing the Motorola deal in mid-August, Google CEO Larry Page said the Nortel patent acquisition was further proof that "companies, including Microsoft and Apple, are banding together in anti-competitive patent attacks on Android."

Motorola's SEC filing shows that Google wanted to do more than just complain. According to the filing, senior management at both companies, including Page, had conversations about the Nortel acquisition and patent litigation, as well as how both Google and Motorola could protect themselves. One of the "strategic options," Motorola noted, was its acquisition by Google.

According to the filing, Motorola then started the process of accepting a bid from Google, including hiring financial advisers to assist management.

By August 1, Google made its first offer to Motorola--$30 per share--and requested the company respond by August 4. Motorola didn't make the deadline, according to the filing, but did respond to Google on August 5 with a proposal of $43.50 per share.

Google didn't take the bait, though. The search giant called Jha on August 9, saying it would increase its price to $37 per share. But after Jha hinted that he would recommend the board reject the deal, Google called back two days later to increase its purchase price to $40 per share--a deal that Motorola Mobility's board accepted soon thereafter.

Related stories:
• Apple, RIM in group buying Nortel patents for $4.5B
• Google to buy Motorola Mobility for $12.5B
• Five possible responses to the Google-Motorola merger

If the deal is not approved by regulators, Motorola can still walk away with serious cash. The filing reveals that "Google would be required to pay Motorola Mobility a termination fee of $2.5 billion and that under certain circumstances if Google breached its obligation to use reasonable best efforts to obtain necessary antitrust clearances, Motorola Mobility may be able to seek additional damages from Google in an amount equal to $1 billion, in addition to the reverse termination fee of $2.5 billion."

Finally, Motorola revealed why it didn't seek other offers. According to the company, the board believed that there was a risk of not getting such a preferable deal. Plus, the company had the right to break the deal with Google if it received a better, unsolicited offer.

Google did not immediately respond to CNET's request for comment.

 

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