Google Motorola Acquisition

Presented by:
Subatta sawant
Deepti dubey
Yashasvi tamore
Mamta bangera
Riddhi sawal
Sharvani pawar

Flow of presentation

Overview of both google and Motorola

Pre-acquisition scenario of google

Pre-acquisition scenario of Motorola

Details of the deal

Purchase consideration

Terms and condition

Post acquisition scenario

Suggestion

Conclusion

Google

Google is an American multinational corporation

Most of its profits are derived from AdWords

Google was founded by Larry Page and Sergey Brin

Google began in Jan 1996 as a research project by Larry Page and Sergey
Brin

Google was incorporated on September 4 th,1998

Google continued..

Together they own about 14 percent of its shares

An initial public offering followed on August 19,2004

Its mission statement and its unofficial slogan

In 2004,Google moved to its new headquarters in Mountain View,

California

Google began as an online search firm

Desktop products include

The company leads the development of the Android and the browseronly chrome OS

Motorola Inc

Motorola Inc was a multinational telecommunication company

After having lost $4.3 billion from 2007 to 2009 , it got divided
into independent companies on January 4 2011

Motorola Mobility

Motorola mobility is an American mobile device subsidiary of the

Chinese multinational computer technology company Lenovo

The company was formed on January 4,2011

Motorola mobility took the companys consumer-oriented product

lines

The company primarily manufactures smartphones

Pre acquisition scenario

INCOME STATEMENT
In Millions of USD (except for per share items)
Revenue
Other Revenue, Total

31-12-2011

31-12-2010

31-12-2009

13,064.00

11,460.00

11,050.00

Total Revenue

13,064.00

11,460.00

11,050.00

Cost of Revenue, Total

9,747.00

8,495.00

8,897.00

Gross Profit

3,317.00

2,965.00

2,153.00

Selling/General/Admin. Expenses, Total

1,745.00

1,592.00

1,486.00

Research & Development

1,526.00

1,479.00

1,591.00

59

55

57

Depreciation/Amortization
Interest Expense(Income) - Net Operating

Unusual Expense (Income)

Other Operating Expenses, Total

132

Total Operating Expense

Operating Income

-227
-

241
-

13,209.00

11,394.00

12,272.00

-145

66

-1,222.00

Interest Income(Expense), Net Non-Operating

Gain (Loss) on Sale of Assets

Other, Net

-33

11

Income Before Tax

-148

-4

-1,335.00

Income After Tax

-249

-79

-1,335.00

Minority Interest

-7

-7

Equity In Affiliates

Net Income Before Extra. Items

-249

-86

-1,342.00

16,000.00

14,000.00

12,000.00

10,000.00

8,000.00
Total Revenue
Total Operating Expense
Net Income Before Extra. Items

6,000.00

4,000.00

2,000.00

0.00
31-12-2011
-2,000.00

-4,000.00

31-12-2010

31-12-2009

What happened to Motorola?

2007: Handset division suffered a loss of U.S$1.2 billion.

2008: Laid off 3,500 workers & 4,000 job cuts. Company's handset division
was also
put on offer for sale.

2009: Global market share had declined; from 18.4% of the market in
2007 by just 6.0%

2011:Motorola Inc. was split into two publicly traded companies,

Motorola Solutions &Motorola Mobility. Motorola Mobility was spun off into
an independent company

Pre-Acquisition performance of Google

50,000,000
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0

2011
Revenues

2012
Total Expense

Figures in $
Net Income

Why did Google Acquire Motorola Mobility?

Google needed Motorola Mobility Patent Portfolio.

Google and Motorola Mobility together will acceleration

innovation and choice in Mobile computing

Google with the help of its Android and Motorola Mobile Device
could compete with HTC, Samsung, Apple and other Mobile
companies

Google will get the chance to enter into set- top Box Business.

Google's interest in using Motorola's patent portfolio as a

defensive measure against an increasingly-litigious Apple.

Deal

The Deal
On

1st Aug 2011 Google made its first offer and on 9th
Aug it made its second offer to Motorola Mobility both
were rejected.

On

15th Aug both the firms agreed to a price of $ 40 per

share, a 63 percent premium on current value of shares.

This

brought the total price of the deal to $12.5 billion.

The

deal was completed on 22nd may 2012.

Break up of $12.5 billion

$ 5.5 billion

Patents And Developed

Technology

$2.6 billion

Goodwill

$730 million

Customer Relationships

$670 million

Other Assets

$ 3 billion

Cash

Post deal considerations

Motorola Mobility had 17000 patents with 7500 applications

pending so GOOGLE expected total of 24500 patents.

This acquisition would strengthen the ties between hardware and

software.

The expectations of GOOGLE were :-

1.

To protect and advance Android ecosystem.

2.

To enhance competition in mobile computing.

3.

Android will remain open and Motorola Mobility will be run as a

separate business.

OTHER TERMS AND CONDITIONS

The parties to the proposed transaction have a combined

aggregate world-wide turnover of more than EUR 5 000 million.

The transaction will bring together two complementary businesses

and does not give rise to any horizontally or vertically affected
markets.

The Commission concludes that Google controls Android and all of

the market share corresponding to Android should be attributed to
Google.

It appears from the market investigation that other existing mobile

OSs currently under development would provide roughly equivalent
features or characteristics to those of Android.

Post-Acquisition scenario

Products introduced

Motorola never made Google any money.

Post acquisition performance of
google-Motorola mobility (million $)
4443
4136
3773
3458

678
2012
revenue

670
2013

cost of revenue

income before other expenses

Expenses of Motorola mobility under Google's

ownership
Other expenses

2012 (in million

dollars)

2013 (in million

dollars)

research and
development

474

702

sales and marketing

524

678

general
administrative

236

319

Post acquisition changes in companies

Motorola Mobility's CEOSanjay Jhawas replaced byDennis Woodside,

a former Senior Vice President at Google.

Impact of acquisition on the stocks of the companies.

Elimination of 4000 employees.

Sold off home segment in December 2012.

Close down of manufacturing units.

Licensees started hedging their bets.

Googles final move

Entered in an agreement with Lenovo on January 29th 2014.

Sold for $2.9 billion.

Continued to hold vast patents portfolio of Motorola mobility.

$2.19 billion

$1.5 billion in
3years pre-payable
promissory notes

$750 million in
Lenovo ordinary
shares

$1.4 billion paid at

close

$660 million in
cash

SUGGESTIONS

Google acquired Motorola at $12.5 billion and sold it to Lenovo

at $2.9 billion.

The Motorola purchase hurt Googles relationship with Samsung.

Motorola pilled up losses throughout Googles ownership.

CONCLUSION

The deal was one of this eras most influential event in the tech
industries.

It was a bold move.

The 2 factors behind this deal was:-

o
o

Googles envy on Apple

It also wanted to get its hands on Motorolas deep patent
portfolio.