|How the Google-Motorola Deal Went Down |
By EVELYN M. RUSLI
New York Times
September 13, 2011, 7:56 pm
It took less than seven weeks, but it became more expensive quickly.
From the first discussions in early July to a formal announcement on Aug. 15, Google moved swiftly this summer to secure a $12.5 billion takeover of Motorola Mobility, according to a filing submitted on Tuesday. The search giant, which was eager to own Motorola’s extensive patent portfolio, was also willing to pay up.
After floating an initial bid of $30 per share on Aug. 1, Google raised its offer price to $37, before settling at $40 per share. In just weeks, the offer increased by more than $3 billion.
For that, Motorola can thank Frank P. Quattrone, whose investment bank was hired on Aug. 1.
The filing, which maps out the background of the merger, discloses how the deal came together in the wake of Google’s failed bid for Nortel’s patent portfolio. In early July — mere days after Google lost out to a consortium led by rivals Apple and Microsoft — Andrew Rubin, the company’s senior vice president of mobile, reached out to Sanjay Jha, the chief executive of Motorola Mobility, to discuss “the possible impact of and potential responses” to the Nortel purchase. Over the next several days, discussions intensified, roping in more executives, including Google’s chief Larry Page and Nikesh Aurora, the company’s chief business officer. And by mid-July, the parties had agreed to a confidentiality agreement, as Google began due diligence on Motorola’s patent portfolio.
Although talks initially centered on Motorola’s patents, the focus quickly shifted to takeover talks. On July 28, Google said it would entertain a bid in the range of high $20s to low $30s. On Aug. 1, it came back with a formal letter and a $30 offer.
Enter Mr. Quattrone. On that day, Motorola hired Mr. Quattrone’s Qatalyst Partners and Centerview Partners to serve as financial advisers.
According to the filing it was Qatalyst, which has recently advised some of the largest takeover transactions in the technology sector, that prodded Google to go higher. On Aug. 5, after a telephone meeting with Motorola’s directors, an unnamed Qatalyst representative contacted Google’s chief legal officer “to reject the $30 per share offer and suggested that Google increase its proposed price to $43.50 per share.”
On Aug. 9, Google came back with $40 a share.
At the tail end of the process, Motorola’s board considered seeking other buyers, but ultimately concluded that it was “preferable to negotiate on a confidential basis with a single potential acquirer, rather than to conduct a private or public auction. Six days later, the deal was done.