Report: Google would pay Motorola $2.5B if deal collapses

Google (NASDAQ:GOOG) would pay Motorola Mobility (NYSE:MMI) a break-up fee of $2.5 billion if Google walked away from its proposed $12.5 billion acquisition of Motorola, according to a Reuters report.

The report, citing an unnamed source, said that Motorola would pay Google $375 million if it walked away from the deal. Google's fee to Motorola represents 20 percent of the value of the deal, while Motorola's fee is 3 percent. Blockbuster acquisitions of this sort typically carry a break-up fee, which come into play if regulators decide not to approve the deal or if it falls through for some other reason. For instance, AT&T (NYSE:T) will pay Deutsche Telekom $6 billion in cash, spectrum and roaming agreements if its proposed $39 billion acquisition of T-Mobile USA does not go through.

The Reuters report is one of several that have emerged since Google announced plans to acquire Motorola.

According to a Bloomberg report, Google approached Motorola a week before activist investor Carl Icahn publicly pressed Motorola to monetize its patent portfolio (Google cited Motorola's patents as one of the key justifications for the acquisition). The report, also citing unnamed sources, said Google CEO Larry Page approached Motorola CEO Sanjay Jha in mid-July, and that as the talks progressed, David Drummond, Google's chief legal officer, and Andy Rubin, Google's senior vice president and the head of Android, took the lead in the negotiations with Motorola.

Meanwhile, according to GigaOM, Google was not the only suitor for Motorola. According to the blog, which cited unnamed sources, Microsoft (NASDAQ:MSFT) was one of the companies that expressed interest. Microsoft was looking at Motorola for its patents as well, the blog said.

Representatives from Google and Motorola declined to comment and a Microsoft spokeswoman did not immediately respond to a request for comment. 

For more:
- see this Reuters article
- see this Bloomberg article
- see this GigaOM post

Related Articles:
What does Google's Motorola acquisition mean for Nokia, RIM?
Google shields Android from patent lawyers with $12.5B Motorola Mobility deal
Activist investor Icahn wants Motorola to monetize its patent portfolio
Google: Rivals seeking to cripple Android with 'bogus patents'
Motorola ships 440,000 Xoom tablets, 4.4M smartphones in Q2
Motorola CEO Jha open to software partnership