Wednesday, August 17, 2011

Google Motorola Deal

Google has agreed to acquire Motorola Mobility Holdings Inc (MMI) for over 12 billion dollars. This comes on the heels of Google losing its bid to acquire Nortel's 6000 patents which were sold to a consortium of its competitors for $4.5 billion.  Deal amount of 12 billion for Motorola's potentially 25,000 patents seems to be a great deal for Google. The operating company, with close to run rate of over 12 billion (with consensus 13.5 at billion dollars for the year 2011) in annual revenues, is virtually free.

This is a great deal for MMI's share holders as they got more than 60% premium to the the closing price prior to deal announcement.

What I suspect however, is that Google will spin this out in a couple of years, post it has had a chance to seal rights to these patents and bought these off MMI. Google is not a hardware company and should remain that.  

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