Yesterday, the big news was that Google plans to purchase Motorola for $12.5 Billion dollars. One of the primary reasons for this acquisition was to bolster Google's patent portfolio with Motorola's considerable 25,000 patents. This will help Google protect Android from the legal war that Apple and Microsoft are currently waging indirectly against Android. Google is so confident and committed to the Motorola deal, they have promised to pay an astonishing $2.5 Billion dollars to Motorola, even if the deal falls through! According to the Bloomberg article, this is more than six times the typical amount that is paid in this sort of breakup fee deal. Here's a quote from the Bloomberg article,Also, Elizabeth Nowicki, a mergers and acquisitions law professor at Tulane University Law School in New Orleans, had this to say,“A high reverse breakup fee shows the buyer’s confidence of getting the deal done,” said Donna Hitscherich, a senior lecturer in finance at Columbia Business School, who is also a former banker and lawyer. “People don’t do deals to get the breakup fee, they do them to get the deals done.”This just shows what a truly "big" deal this is and how important it is to Google to make this deal go through.“The unusually high reverse breakup fee shows that Motorola doesn’t want to risk being left alone at the altar, especially in the current market’s conditions."
Source: BusinessWeek/Bloomberg and BGR