When I predicted that Google's acquisition of Motorola Mobility would cause the company legal trouble, I didn't expect this exact scenario: investor John W. Keating has sued Motorola Mobility itself, its CEO Sanjay Jha, nine members of its board of directors, and even Google for failing to get a fair price on the deal.
In Keating's own words, as reported by Businessweek:
“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."
On the one hand, it's true that Google's getting a lot out of this deal. For $12.5 billion, the search giant gets a much-needed patent portfolio that can shield against lawsuits, greatly increased control over the Android ecosystem, and a general entryway into the hardware market.
But on the other hand, that $12.5 billion figure comes out to about $40 a share, or 63% over Motorola Mobility's closing price on August 12th. It seems that Keating figures the markup to not be generous enough.
Keating's complaint has been filed on behalf of all Motorola Mobility shareholders, and he's seeking class action status for the lawsuit. In fact, he's seeking an order to prevent the deal from completing. So far, neither Motorola Mobility nor Google has issued a reaction to the suit.
According to Businessweek, the case is Keating v. Motorola Mobility Holdings Inc., 11CH28854, in the Cook County, Illinois, Circuit Court, Chancery Division (Chicago).