Google, Motorola file for merger clearance in many countries
- — 14 September, 2011 16:20
Google and Motorola Mobility plan to file for pre-closing antitrust clearances for the merger of Motorola with a Google subsidiary in a number of jurisdictions including Canada, China, Israel, Russia, Taiwan and Turkey, in addition to filings in the U.S. and before the European Commission.
The companies have already filed for clearance to the U.S. Federal Trade Commission and the Antitrust Division of the Department of Justice on Aug. 29 under the Hart-Scott-Rodino Act, and the request is still within the usual waiting period of 30 days, Motorola Mobility said in a filing to the U.S. Securities and Exchange Commission on Tuesday.
The U.S. agencies can either allow an "early termination", or if either agency determines during the waiting period that further inquiry is necessary, it can in a "second request" call for additional information and documents beyond the waiting period.
Google said in August it entered into an agreement to acquire the mobile phone and tablet maker for about US$12.5 billion, to strengthen its patent portfolio.
Google will acquire Motorola through the merger of the company and RB98, a wholly-owned subsidiary of Google formed solely for the purpose of facilitating the acquisition, which will cease to exist after the merger, the filing said. Motorola will continue as a wholly-owned subsidiary of Google.
Fifteen putative class-action complaints challenging the proposed transaction have been filed against Motorola Mobility and its directors, according to the filing. Motorola Mobility and its directors intend to vigorously contest the allegations, it added.
The merger agreement and the transactions contemplated by the merger agreement were more favorable to Motorola Mobility stockholders than remaining independent or other strategic alternatives available to Motorola and its stockholders, because of ongoing risks Motorola faces in a historically volatile consumer-based industry with intense competition from highly successful competitors, short product cycles relying heavily on product execution, carrier and consumer demand, evolving technologies and ongoing intellectual property litigation, the filing said.
The filing also reveals further details of the behind-the-scene negotiations between the two companies, starting with Andrew Rubin, senior vice president of mobile at Google, contacting Sanjay Jha, chairman and chief executive officer of Motorola Mobility, in early July to request a meeting to discuss the purchase by some of Google's competitors of the patent portfolio of Nortel Networks and its subsidiaries in a June auction, and the possible impact of and potential responses to the purchase.
Nortel said in a statement in June that a consortium consisting of Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony had emerged as the winning bidder in a multi-day auction of its remaining patents and patent applications.
The companies also discussed at subsequent meetings the impact of the Nortel auction, intellectual property litigation and the potential impact of such litigation on the Android ecosystem, options relating to Motorola's patent portfolio, and the potential sale of Motorola Mobility to Google.
Jha is said to have indicated to Nikesh Arora, senior vice president and chief business officer of Google, in a July 6 meeting that it could be a problem for Motorola Mobility to continue as a stand-alone entity if it sold a large portion of its patent portfolio.
On Aug. 1, Google sent a letter to the board of directors of Motorola Mobility proposing an acquisition of the company by Google for $30.00 in cash per share of Motorola Mobility common stock. Four days later, Motorola's financial advisors for the merger Qatalyst Partners, rejected the offer and suggested $43.50 per share. Google came back on Aug. 9 with an increased offer of $37 a share, according to the filing. Motorola in turn asked for $40.50, and Google responded the same day by letter with a new offer of $40 a share.
Google could not be immediately reached for comment.