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Was Google Desperate To Buy Motorola?

Two days after Google's surprise acquisition of Motorola Mobility Holdings, new details have emerged over the timing, the value and the way the transaction has been conducted.

The overall picture depicted leaves us to believe that the web giant was fairly desperate to grab Motorola Mobility with the 24500 mobile and non-mobile patents held by the company being the most likely reason why the deal was done.

A number of news publications have commented that Google paid well over the odds to acquire Motorola, potentially in a bidding process that saw other companies (Microsoft was named by Gigaom as one of them) with Ars Technica (opens in new tab) pointing out that when the Nexus One was launched 18 months ago, Motorola as a whole was worth $10.6 billion with the mobile devices representing less than a third of Moto's sales.

Worse, it was not even generating profits which was why Carl Icahn was so focused on breaking the company in two to give shareholders a very good reason to smile.

There's also the fact that while Google is cash rich with around $30 billion in its chest, it would probably have been better for the company to use some stock to pay for the transaction; instead the acquisition was all cash, a possible sign that it was seller-led rather than vice-versa.

Florian Mueller from Fosspatent (opens in new tab), also pointed to the abnormally large break-up fee which might be a cause of concern for Google's own shareholders.

Part of the agreement between the two parties is that Google will have to pay Motorola a whopping $2.5 billion (opens in new tab) (or around a fifth of the acquisition fee itself) if the deal doesn't go through; that, according to Bloomberg, is more than triple, on a percentage basis, what AT&T paid for the acquisition of Deutsche Telekom AG’s T-Mobile USA, which shows that the buyer is now confident that the deal will be done.

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at ITProPortal.com where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.