Investor sues Motorola Mobility, Google over $12.5-billion deal
A Motorola Mobility shareholder has reportedly filed a lawsuit against the company and Sanjay Jha, its CEO, alleging that the smartphone and tablet maker undervalued the firm when agreeing to sell it to Google for $12.5 billion.
That purchase price, which Google and Motorola Mobility announced publicly on Monday, is a 63% premium over Motorola Mobility shares' closing price on Friday and also the largest amount that Google has ever agreed to pay in an acquisition. The deal has been approved by Google and Motorola's boards of directors.
John W. Keating, the investor who filed the suit on Tuesday in a Chicago court, also listed Google and Motorola Mobility's board as defendants, according to a report on the suit from Bloomberg.
"The offered consideration does not compensate shareholders for the company's intrinsic value and stand-alone alternatives going forward, nor does it compensate shareholders for the company's value as a strategic asset for Google,” Bloomberg reported Keating stated in the suit.
Keating also said in his complaint that he is seeking class-action status and a court order that would block the completion of the sale, the report said.
Google's agreement to takeover Motorola Mobility is fueled by a need for mobile technology patents and is an attempt to have a more closely aligned hardware partner, one that would help Google and its Android mobile OS build premium devices to compete with Apple's iPhone.
The deal still needs to be approved by the Federal Trade Commission and the Department of Justice because of antitrust concerns, but if the deal is completed, Google will own about 17,000 patents currently belonging to Motorola Mobility.
Google has said it would run Motorola as an autonomous company, and makers of Android phones such as HTC, LG, Samsung and Sony have come out in support of the move. But there is also talk of the purchase possibly pushing hardware makers to give another look at competing mobile operating systems such as Microsoft's Windows Phone and HP's WebOS.
Officials at Google and Motorola were unavailable for comment on the suit as of Thursday morning.
-- Nathan Olivarez-Giles
Photo: The Motorola Xoom tablet computer, the first tablet to run Google's Android Honeycomb operating system. Credit: Paul Sakuma / Associated Press