What is Google up to Now?
Recently the multi-billion dollar corporation Google began discussions with Motorola. This unprecedented merger comes with a shocking termination agreement to the tune of $2.5 billion dollars to be paid to Motorola if, for any reason, the deal is not agreed upon and papers signed by February 15, 2013.
Why is this termination agreement so shocking? Simply put, this kind of termination fee has not been witnessed before. The merger itself is valued at $12.5 bill dollars, making this a 20% termination fee that could land Motorola just that much richer. However, even with this amazing condition in place, Motorola stockholders have been seen selling their stock on a daily basis, seeming to sense a dark omen hanging over the merger itself.
The terms of this merger appear quite one-sided, giving Google all the benefits, while only providing Motorola with some solid money backing, which may be the cause of such widespread concern. The US Government itself has stepped forward, voicing very serious concerns about Google’s recent acquisitions, and stating they feel the merger with Motorola may be an act of monopolization on the part of Google.
As with any mass patent acquisition, there is always the concern that one company may become a market leader by force. This is definitely the case with Google, as even Google investors are becoming restless in regards to a merger with Motorola after the recently publicized financial statements made by Motorola themselves. With a declining profitability in recent years, Motorola has found it hard to keep up with such market leaders as Apple or Samsung, resulting in their need to seek out a suitable partner to continue their efforts.
While this sounds like Motorola is simply gaining a strong backing from Google, upon closer inspection this is clearly not the case. In the merger, there exist limitations upon Motorola that limit their profitability from this merger. Rules regarding royalties, patents, and income have been set which would mean Motorola barely profits from the merger, giving Google the lion’s share of the profits, a fact that seems to eat at both Motorola and Google stockholders alike.
With both being big name companies in the technology fields, the merger seem to make great business sense, in spite of the misgivings over the publicized terms of this agreement. Many people wait with baited breath while negotiations continue between the two companies, hoping to see both forward movement for Google, as well as a brighter future for Motorola.