Motorola / Google Merger

Abstract

The merger of Google and Motorola will open up new avenues of competition. This merger will give Google control of the hardware and software it uses in its products. Previously Apple did not have to face a tough competition because it had control of the hardware as well as the software it uses in its products (Taylor, P. 2011).

This merger has gained a lot of attention due to its significance in the IT sector as well as the money involve.

The 10 Points

In order to get an in-depth view of the deal, the 10 point method will be followed. This categorizes some of the important aspects of the merger in order to get all important questions answered.

1. Merger Consideration

In August 2011, Google announced its desire to acquire Motorola for $12.5 billion. It will pay Motorola $40 per share, which amounts to roughly 63% premium. The deal will also give Google $3 billion cash that is in the books of Motorola (Taylor, P. 2011).

This deal will put Google in direct competition with Apple as both companies will now have control of the hardware as well as software of their products.

2. Deal Protection

According to the agreement, if this agreement is terminated, any expense incurred will be paid by the company that incurred the expense. The termination fee for this deal is $375 million and incase the deal is terminated by the parent company, it will have to pay for all the expense incurred within two working days (Davidoff, M. S., 2011).

3. Financing

Google has decided to finance this deal out of its own resources. The entire amount of $12.5 billion will come out of Google's account (Davidoff, M. S., 2011). There is no question of unavailability of finance as Google had $36 billion in cash in its account in June 2011.

4. Social ...