Speculation surrounds the Google/Motorola deal

Back in 2004, Google CEO Eric Schmidt proclaimed, “We’re not getting into the phone business, but we’re going to make sure Google is on those phones.” However, just the following year, Google Inc acquired Android Inc, in a transaction that was hardly noticed. It wasn’t until 2006 when Apple got a glimpse of a handset using the Android operating system, one that offered similarities to the Apple iOS, that signs of a battle lay ahead. Shortly after, Eric Schmidt left the board of Apple, signaling the start of the competition between the companies in the years ahead.

Most recently, Google was declared the loser in the bid for the roughly 6,000 patents sold by Nortel Networks Corp for $4.5 billion, which were acquired in July by a consortium consisting of the aforementioned Apple and Microsoft, but along with EMC, Ericsson, Research in Motion, and Sony.

Yet, speculation now is that Google intended to merely drive up the price for the Nortel patents, as it had its eyes on its next big move. In August, Google made headlines with its $11.9 billion acquisition of Motorola Mobility. The offer of $40 per-share, represents a 63.5% 1-day premium to the close of Motorola Mobility shares on August 12th, but more importantly announced its intention of having its Android operating system match Apple’s model of controlling all aspects of its systems.  

Behind the headlines, the strategic implications resulting of the proposed acquisition, would be Google’s rights to a patent portfolio with over 17,000 phone related patents. With the demand for smartphones increasing, the patents offer protection for the company from Apple and its iPhone and the Android technology Microsoft lays claim to.

According to data from FactSet Mergerstat, since its acquisition of Android, Google has made 18 acquisitions of mobile handset related companies, ranging from software solutions, device makers, and interface applications. Conversely, Apple has made only a relatively small amount of acquisitions in this area, accounting for only four purchases for the same period, mostly focusing on software applications for its iPhone devices. As for Microsoft, the company has made 11 purchases over the same period, again focusing on content applications.

Read the rest of this story and more about the latest deal trends and key transaction statistics in the U.S. M&A market in FactSet's Flashwire M&A Monthly newsletter.

All of the data used to compile Flashwire M&A Monthly is from the FactSet Mergers database.