M&A STORIES - The Good, The Bad and The Ugly

GOOGLE BUYS AND SELLS MOTOROLA IN LESS THAN 2 YEARS

August 17, 2021 Robert Heaton & Toby Tester
M&A STORIES - The Good, The Bad and The Ugly
GOOGLE BUYS AND SELLS MOTOROLA IN LESS THAN 2 YEARS
Show Notes

Another acquisition dissected by the dastardly duo of Toby Tester and Robert Heaton and this week it's Google's $12.5Bn acquisition of Motorola. A deal which they then sold to Lenovo less than 2 years later, for $2.9Bn.

On the first examination, this looks like a disaster, but in reality, Google came out of this break-even. Why? because Motorola had $3.2Bn in cash, the sale to Lenovo offered Google a $2.5Bn tax benefit and they retained 17,000:  Yes, you read that correctly - Seventeen Thousand patents valued at $5.5Bn that would help Google see off challenges to its Android platform.

And let's not forget, an acquisition of this size is pocket money for Google and they have the ability to take measured risks on things like this. 

So what was Google's rationale?  The short answer, they thought they could supersize Motorola and disrupt the smartphone market but if you consider that the smartphone market is dominated by Apple and Samsung, you'd really have to think hard about how successful you might be.

Bottom line, Google realized fairly quickly that this had been a mistake and they offloaded Motorola and went back to doing what they are good at.

And as always, we leave you with three or four lessons that you might consider when finalizing your next acquisition.