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Background revealed for Google-rola deal

15 Sep 2011

The public has received a lesson in negotiating big business deals, with Motorola Mobility filing a report with the US Securities & Exchange Commission (SEC) showing how its CEO, Sanjay Jha, conducted the negotiations that led to Google purchasing the company for US$12.5 billion in August.

The filing states that the discussions about a purchase began in early July 2011, with Google’s senior vice president of mobile, Andrew Rubin, contacting Jha to request a meeting to discuss the purchase of the Nortel Networks patent portfolio by a consortium of Google’s competitors.

The pair and other executives from both companies engaged in a series of meetings to discuss their businesses and the industry in general, before Google made its first bid on August 1 to buy Motorola Mobility for US$30 per share, in cash. Google requested a response by August 4.

Motorola Mobility promptly engaged financial advisors Qatalyst Partners, and through them communicated further with Google executives including senior vice president of corporate development, David Drummond. During this time Google indicated the company was ‘willing to improve the terms of its proposal’.

On August 5, Google rejected the US$30 per share offer, coming back with a suggestion of US$43.50 per share.

On August 9, Google responded with an offer of US$37 per share, to which Motorola Mobility responded with a suggestion of US$40.50 per share.

Later that day, Google increased its offer again to US$40 per share – a 33% increase over the course of the day – and requested a response by close of business the following day. Motorola Mobility’s board met via video conference and, without determining to accept the offer, agreed to authorise management to negotiate terms and conditions of a potential transaction based on the proposal.

In the evening of August 14, the board met again over the telephone and determined that the US$40 per share offer was in the best interests of Motorola Mobility stockholders, and approved the agreement. The two companies issued a joint press release the following morning.

Go here to read the full SEC filing.