A shareholder has sued Motorola Mobility and its CEO Sanjay Jha alleging that the company did not negotiate the best possible price when it decided to sell itself to Google for a deal worth $12.5 billion. The complaint by an investor named John W. Keating, which he filed in at the Chicago state courthouse yesterday, has also named nine of Motorola’s board members and Google as defendants in the case. The agreement was announced by the companies only earlier that day.
Keating claims that shareholders are not compensated for the intrinsic value of the company and its value as one of Google’s strategic assets by the consideration that was offered. Google, which is the world’s largest maker of software for smartphones, agreed to acquire Motorola Mobility under a deal according to which, each of Motorola’s shareholders will be paid $40 per share in cash, which is around 63% higher than the closing value of the company’s stock on the 12th of August.
The transaction has been approved by the boards of the California based Google and Illinois based Motorola, according to a statement released by the companies. If the US Justice Department gives the acquisition its antitrust clearance, Google will also get more than 17,000 patents which are currently with Motorola.
It is well known that the internet search giant is knee deep in various patent infringement lawsuits filed by its rivals in the smartphone and tablet space, such as Apple and Microsoft. The smartphones made by mobile manufacturers like HTC Corp, Samsung Electronics and Motorola run on Google’s Android mobile platform.
Motorola sold over 11 million devices which included 440,000 tablets and 4.4 million smartphones during the last quarter, said a statement that the company released last month to report its net revenue worth $3.3 billion during the second quarter of this year, which was an increase of 28% as compared to the same quarter last year.
After filing the complaint on behalf of all the other stockholders of Motorola, Keating said that there has been an economic resurgence for Motorola after it split into two different companies this January and the Android OS that it runs its devices on is steadily gaining market share against the Apple iPhone. He said that the shareholders of Motorola Mobility will now not be able to have a share in the future successes of the company.