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Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail bwalko@sokoloffco.com with your contact information.

Archives > Transaction Case Study 55

SOKOLOFF & COMPANY CASE STUDYGOOGLE BUYS MOTOROLA MOBILITY

BUYER:  Google (NASDAQ: GOOG)
SELLER:  Motorola Mobility Holdings, Inc. (NYSE:MMI)
PURCHASE PRICE:  $12.5 Billion
FORM OF PURCHASE PRICE:  $40 per share in cash
    • Premium of 63% on the closing price of MMI Shares as of August 12, 2011

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES


Year
2009 2010 Trailing Twelve Months
Year Ending
July 2, 2011

Revenue

11.05M

11.46M

12.74B

EBITDA

N/A

306M

304M

Cash

 

 

3.05B

Debt

 

 

98M

Purchase Price

 

 

12.5B

Enterprise Value

 

 

9.55B

Multiple of Revenue

 

 

.75

Multiple of EBITDA

 

 

31.41

TRANSACTION DRIVERS:  The acquisition of Motorola Mobility, a dedicated Android partner, is expected to enable Google to enhance the Android ecosystem and improve its competitive position in mobile computing.   MMI’s 17,000 patents will also help Google defend against patent lawsuits levied by competitors like Apple and Microsoft.

SOKOLOFF COMMENTARY: The best thing Google could do with MMI is to keep it at arm’s length and attempt minimal integration.  There is no cultural fit whatsoever between the two firms.  Founded in 1928, Motorola, like its peers at the former Bell companies, is encrusted with a curious mix of engineering genius and an obstinate unwillingness to embrace new, especially outside, ideas.  Place and position are the hallmarks of long term MOTO employees and new, fresh blood usually finds itself thwarted in attempts to capture corporate mindshare and appreciation.

Google is the polar opposite in almost every way.  There is brilliance at both companies however and Larry Page and his lieutenants would do well by approaching cooperative efforts diplomatically, similar to two disparate nations working out how to ally in a common war effort.

 

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