Motorola sued by shareholders over Google sale price

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Just when I thought that Motorola shareholders would be happy with its sale to Google for $12.5 billion, it turns out I couldn’t have been more wrong. In fact, shareholders were hoping that the sale price would be so much higher that they decided to sue Motorola Mobility for the insult. I guess selling itself at a 63% premium over its closing price the business day before its sale wasn’t nearly enough.

BusinessWeek reports:

Investor John W. Keating’s complaint, which was filed yesterday at the state courthouse in Chicago, also names Google and nine members of Motorola Mobilty’s board as defendants. The companies announced their agreement earlier in the day.

“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,” Keating claims.

So, are the shareholders suing over just the “intrinsic and strategic” value of Motorola Mobility? Something that might be considered intangible?

Motorola Mobility, spun off from Motorola Inc. in January, sold 11 million devices including 4.4 million smartphones and 440,000 tablet computers last quarter, it said last month, reporting net revenue of $3.3 billion in the second quarter, a 28 percent increase from the same period a year earlier.

“Motorola has experienced an economic resurgence since separating into two separate companies,” Keating said in a complaint filed on behalf of all Motorola Mobility stockholders. “The Android smartphone technology it relies on continues to gain ground on Apple’s iPhone.”

Oh, I guess not. $3.3 billion in one quarter is about a quarter of the total cost of Google’s acquisition, so I suppose it’s only fair to long-term shareholders that Motorola consider a higher price. But it didn’t, and so now those shareholders are pissed off.

It will be interesting to see how this plays out, as investors are looking to file a class-action lawsuit against Motorola Mobility and CEO Sanjay Jha.

  • Anonymous

    Wow! they put Google on hot seat.. 

  • Anonymous

    Don’t confuse revenue with earnings when applying mutliples to a valuation.  At the end of the day, the stock price should reflect the market concensus, based on public information.  The BoD clearly has inside information and has also deemed the 63% premium a good deal for its shareholders.  Sure, Google may have a lot to gain from MOTO’s patent portfolio…but it could also weaken its other existing OEM relationships.  I’m not sure MOTO’s BoD can easily find a similar suitor with such deep pockets…not without running the real risk of antitrust derailment.  A 63% premium is nothing to scoff at.

    IMHO.

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