Google to pay Motorola $2.5 billion if deal doesn't go through

Google might want to pay $12.5 billion in order to acquire smartphone and tablet maker Motorola Mobility, but no matter what happens Google will still have to pay a bunch of money. Bloomberg reports that Google has a clause in its deal that requires it to pay Motorola a whopping $2.5 billion if it fails to close the acquisition deal. The report claims that the amount for this kind of cancelation fee is six times the normal amount for a deal like this. By contrast, AT&T's proposed purchase of the wireless carrier T-Mobile carries a $3 billion cancelation fee. That's compared to the $39 billion that AT&T is willing to pay up if the T-Mobile deal goes through.

So why the high amount for a cancelation fee for the Google-Motorola deal? According to Donna Hitscherich, a senior lecturer in finance at Columbia Business School, the high fee shows that Google is confident that it will close the deal. Hitscherich says, "People don’t do deals to get the breakup fee, they do them to get the deals done."

In related news, Motorola's stock price soared on Monday after news of Google's planned takeover deal hit the newswires this morning. The stock price ended up over 55 percent compared to Friday's stock price. Google has said it is acquiring Motorola in part to increase the number of patents that it currently owns. It also claims that once the deal goes through, Motorola will be run as a separate business and that the Android operating system will continue to be open source.

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I now think that other Android OEM's anger may be a bit exaggerated. I think they would like Google, to get them rid of the patent fees to "others"( or at least reduce it!). They would like Android to remain free. And they wouldn't want the company behind their favourite OS be endangered.

And Google will surely assure that no OEM is offended, as Page himself said that the Nexus devices won't be Moto-exclusive. It will be the same as before, all OEMs would bid and only one will get to become the ultimate Google device. Google wouldn't go out of the way to aid the Motorola hardware department.

Plus, HTC has offically said that this purchase would not affect it's ties with Google.
( http://www.reuters.com/article...Name=companyNews&rpc=43 )

and that the Android operating system will continue to be open source.

didn't google just get mad at microsoft for sharing "confidential" Android source code ?

Matthew Thepc said,

didn't google just get mad at microsoft for sharing "confidential" Android source code ?

Open-source to Google employees.