Officials expect Google to keep Motorola Mobility's Libertyville site
While state officials said the sale of Motorola Mobility could alter its pact to stay in Illinois, Libertyville's mayor said the smartphone maker is expected to remain in town after Google Inc.'s $12.5 billion acquisition, announced Monday.
Libertyville Mayor Terry Weppler said he was reassured Monday by representatives of both companies that operations here are expected to continue without major changes once the deal closes later this year or early next year.
“Instead of losing Motorola, we're gaining Google,” Weppler said.
“I look forward to welcoming Motorolans to our family of Googlers,” Google CEO Larry Page said in making the announcement Monday.
News of the sale sent Motorola Mobility share prices soaring to $38.12, up 56 percent.
However, it left some wondering about the deal signed with the state of Illinois in May in exchange for more than $110 million of tax incentives. As part of that deal, Motorola Mobility agreed to keep at least 2,500 workers at its Libertyville headquarters, while Gov. Pat Quinn said the company made “an oral commitment” to keep 3,000 jobs. Motorola Mobility currently employs 3,290.
Under Google, Motorola Mobility is expected to operate as a separate entity and retain its name, said Motorola Mobility spokeswoman Becki Leonard.
As for the Libertyville workforce, “it's too early in the process and those details are yet to be determined,” Leonard said.
A spokeswoman for the Illinois Department of Commerce and Economic Opportunity said state officials have been in close contact with both companies.
Google is not bound by the incentive agreement Motorola Mobility reached with the state, said agency spokeswoman Marcelyn Love.
“Our agreement is with Motorola,” Love said.
But Google would be eligible for the same benefits if the company keeps the Libertyville workers in place, she said.
State Rep. Ed Sullivan, a Mundelein Republican whose district includes Libertyville, said the state has yet to spend any money on the incentive deal.
He expressed the same optimism Weppler did that the Libertyville area ultimately could come out ahead.
“I hope the only thing that changes with the sale of Motorola is we have ‘Google' on the front door instead of ‘Motorola,'” Sullivan said.
Bloomberg reported Monday that Google has agreed to lease a four-building office complex in California's Silicon Valley. The Sunnyvale, Calif., office complex, near Google's headquarters in Mountain View, sits on about 27 acres and can house about 3,000 workers, Bloomberg said.
Motorola Mobility also has offices in Sunnyvale, Calif., but Leonard declined to comment further.
Motorola Mobility will remain a licensee of Android, which is the operating system of the smartphones, and Android will remain open.
“Motorola Mobility's total commitment to Android has created a natural fit for our two companies,” Page said. “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers.”
Sanjay Jha, who guided Motorola Mobility's separation from Schaumburg-based Motorola Solutions in January, said the deal offers new opportunities for employees, customers, and partners around the world.
“We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses,” Jha said. He told analysts during a conference call that he intends to see the deal through. But his position with the company after that remains unclear.
Paying a premium price for Motorola was in Google's best interest, Gleacher & Co. analyst Stephen Patel said in a report Monday.
“We would not be surprised if longer-term Google decided to de-emphasize, wind down or sell Motorola Mobility's handset hardware business and instead focus on capturing innovation from Motorola's software team that can be incorporated into the base Android release,” Patel said.
The deal was all about the 17,000 patents owned by Motorola, “and only Google could justify paying a large premium, due to its need to protect Android (manufacturers) that comprise about 40 percent of the smartphone market,” Patel said.
Patel said that the acquisition is “positive for smartphone industry growth” and “helps level the playing field” among the top wireless industry participants, including Nokia, Microsoft, Google and Apple.
However, Google does not currently own and run a wireless handset company. That is a special skill set, said independent wireless analyst Jeff Kagan.
“Jha is needed,” Kagan said. “At least for a few years. He will likely become part of the Google team for the next several years.”
Motorola Mobility likely will keep its Droid smartphones, with the Google platforms, and will add more devices to the mix, Kagan said.
The Motorola name is one of America's historic brands, he said. “On one hand, I can't imagine a marketplace without the Motorola brand,” Kagan said. “On the other hand I can't imagine a company owned by Google with a different name, either. ... Both Google and Motorola brands are well known and valuable. Except Google's brand says new technology and Motorola has a more tired brand. It will be interesting to see what they decide.”
The transaction is subject to customary closing conditions, including regulatory approvals in the United States, the European Union and other jurisdictions, as well as approval from Motorola Mobility's stockholders.