John W. Keating, a Motorola Mobility shareholder, has sued Motorola Mobility, its CEO Sanjay Jha, nine members of its board of directors, and Google for failure to get a fair price on the Google acquisition.
In Keating’s own words:
“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.”
Is the $12.5 billion Google paid for a much needed patent portfolio (roughly 17,000), increased control of the Android Ecosystem, and an entryway into the hardware market an unfair price? The legal protection the patent portfolio brings alone would make it appear that Google did indeed get a good deal.
However, at $12.5 billion, Google paid about $40 per share, or 63% over Motorola Mobility’s August 12th closing price. It would seem odd to think that Motorola Mobility could get a 63% markup and still be unfairly priced, but its an opinion held by Keating and one he is taking the legal steps to pursue.
Keating’s complaint has been filed on behalf of all Motorola Mobility shareholders and he is seeking class action status for the lawsuit (in fact, he’s seeking an order to prevent the deal from completing). Neither Motorola Mobility nor Google has issued a reaction to the suit so far.
The case is Keating v. Motorola Mobility Holdings, Inc., 11CH28854, in the Cook County, Illinois, Circuit Court, Chancery Division (Chicago).