Editor’s note: This article was first published in August 2011, as day-to-day news two days after Google announced it would buy Motorola Mobility for $12.5 billion. The deal closed in 2012, and Google sold most of Motorola Mobility to Lenovo in 2014 for far less.
A shareholder has sued the board of Motorola Holdings Inc for agreeing to sell the company at too low a price. Other shareholders appear to be joining the suit as we write, so they are looking to turn this complaint of breach of duty toward shareholders into a class action and to ask for the sale to Google at this price to be stopped.
Some investors have already come out in defense of Motorola’s board, arguing that selling the company for $12.5 billion will benefit all of its shareholders.
Motorola has not yet responded to the lawsuit, although John Keating, an investor in Motorola, says that in the United States lawsuits, founded or not, have become common after the takeover of a large company or a merger, because as a rule these deals end up becoming a way to cut costs and boost profitability, and there are usually layoffs.
In this case, it’s hard to see why the protest is coming from shareholders when, in the medium to long term, Google’s purchase of the company all but guarantees that the share price will rise.
Only time will tell whether the lawsuit succeeds.
Featured image: Jourdan Cameron, CC BY 3.0, via Wikimedia Commons.
