Cleary, Wachtell lead on Google's $12.5bn Motorola buy

Cleary Gottlieb Steen & Hamilton lawyers helped guide Google toward completing the largest acquisition in the company's history—the $12.5bn acquisition of mobile-device maker Motorola Mobility Holdings Inc., the firm announced yesterday.

In buying the Schaumburg, Illinois–based handset manufacturer, Google—whose Android operating system is used in many Motorola devices—will assume control of one of the mobile industry's strongest patent portfolios, company executives said.

That, Google chief executive Larry Page said in a blog post, will allow the search giant to "better protect Android from anti-competitive threats from Microsoft, Apple, and other companies." Page also predicted that the Google-Motorola combination will "supercharge Android" and boost competition in the mobile market.

In a sign of just how important Google considers the intellectual property it is acquiring, the $12.5bn purchase price translates to $40 per Motorola Mobility share—a 63% premium of where the stock closed trading Friday. Under the deal's terms, Motorola Mobility, which employs 20,000 people worldwide, will continue to operate as a separate unit under the Google umbrella.

Cleary corporate partner Ethan Klingsberg, in New York, is leading the firm's team advising Mountain View, California–based Google on the acquisition, while partner David Gelfand, in Washington, D.C., is leading an antitrust team advising the company.

Other Cleary lawyers involved in the matter are M&A partners Victor Lewkow and Matthew Salerno; antitrust partners Leah Brannon, Francisco Gonzalez-Diaz, and Maurits Dolmans; intellectual property partner Len Jacoby; litigation partners Lawrence Friedman and Michael Lazerwitz; benefits partner Michael Albano; tax partner Sheldon Alster; real estate partner Steven Horowitz; securities partner Janet Fisher; and environmental counsel W. Richard Bidstrup.

Cleary has advised Google on a number of past deals, including the acquisitions of mobile advertiser AdMob for $750m in 2009 and travel data company ITA Software for $700m. The latter deal closed in April after receiving regulatory approval.

Google's chief legal officer is David Drummond, a former partner at Wilson Sonsini Goodrich & Rosati. Kent Walker is the company's general counsel.

Motorola Mobility was advised by a Wachtell, Lipton, Rosen & Katz team led by corporate partners David Karp and Patricia Vlahakis. Motorola is a longtime Wachtell client. The firm's recent history with the company includes advising Motorola Inc. in connection with its split into two publicly traded companies, Motorola Mobility and Motorola Solutions—a process that began in 2008 and reached completion in January.

Scott Offer is Motorola Mobility's general counsel.

Dewey & LeBoeuf partners Denise Cerasani and Richard Climan are representing Google's financial adviser, Lazard Fréres & Co., in the transaction. Centerview Partners, one of Motorola Mobility's financial advisers, hired Gibson, Dunn & Crutcher partners Dennis Friedman and Barbara Becker. Qatalyst Partners, another financial adviser to Motorola, was represented by Davis Polk & Wardwell partners William Kelly and Mischa Travers as counsel.

Investor Carl Icahn, who holds 9% of Motorola Mobility stock and is the company' second-largest shareholder, called the deal "a great outcome" for shareholders in a time of market turmoil, according to The New York Times.

As The Am Law Daily previously reported, Icahn has pushed the company to sell off its patents to improve shareholder value. In promoting such a move, Icahn pointed to the $4.5bn raised by the bankrupt Nortel Networks Corporation estate during a July patent auction.

The outcome of that auction was the likely motivation for Google's pursuit of Motorola Mobility, Reuters reports. A consortium of technology companies made up of Apple, EMC, Ericsson, Microsoft, Research in Motion, and Sony teamed up to make the winning bid, which was well above the $900m "stalking horse" offer submitted by Google. (Federal antitrust regulators are reportedly reviewing the Nortel auction results closely.)

Google's acquisition of Motorola Mobility is expected to close no later than early 2012. The boards of both companies have already approved the deal, but shareholders and regulators must still weigh in.

(Published by The Am Law Daily - August 15, 2011)

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