Google Inc. approached Motorola Mobility Holdings Inc. a week before activist investor Carl Icahn publicly pressed the phone maker to explore strategic alternatives, said two people with knowledge of the matter.
Google Chief Executive Officer Larry Page started takeover talks with Motorola Mobility CEO Sanjay Jha around mid-July, said the people, who declined to be identified because the discussions were private. The companies were already negotiating when Icahn said on July 21 that Motorola Mobility’s patent portfolio held “significant value” and the company should look at options for the asset.
Page, the Google co-founder who took over as CEO in April, saw Motorola Mobility as a way to get his company further into the mobile-phone business while also protecting its Android operating system from rivals such as Apple Inc. and Microsoft Corp. Google, the biggest maker of smartphone software, announced yesterday it would buy the Libertyville, Illinois-based Motorola Mobility for $12.5 billion, or $40 a share, 63 percent more than the closing price on the New York Stock Exchange on Aug. 12.
Jill Hazelbaker, a spokeswoman for Google, declined to comment, as did Motorola Mobility spokeswoman Jennifer Erickson.
As the talks progressed, David Drummond, Google’s chief legal officer, and Andy Rubin, Google’s senior vice president of mobile, took the lead in the negotiations with Motorola Mobility, one of the people said. Rubin said on a conference call yesterday that he spoke with the top Android licensees before the takeover announcement, “and they all showed very enthusiastic support for the deal.”
The biggest Android handset makers include HTC Corp., Samsung Electronics Co. and Motorola Mobility.
Google, based in Mountain View, California, was interested in Motorola’s hardware and ability to distribute phones, as well as its software patents, one person said.
Google hasn’t made a decision on what to do with Motorola’s unit for television set-top boxes, another person said. It may find a use for that business with its Google TV product, the person said.
Motorola Mobility didn’t initiate discussions with any other potential buyers, said one person. The company did have talks with Microsoft about patent litigation and other issues unrelated to a sale, the person said.
Microsoft spokesman Kevin Kutz declined to comment.
After the deal with Motorola Mobility, Google is less interested in bidding for InterDigital Inc., a designer of mobile-phone technology that has hired bankers to consider a sale, said one of the people. Google, Apple and Samsung have been among companies weighing offers for King of Prussia, Pennsylvania-based InterDigital, people familiar with the matter said in recent weeks. InterDigital’s stock dropped 14 percent yesterday.
Icahn has about an 11 percent stake in Motorola Mobility, according to Bloomberg data.