New Lawsuit Aimed at Google and Motorola Mobility – Not Filed by Apple or Microsoft

We see the words ‘Lawsuit’ and ‘Google’ and we automatically think Apple. How horrible is that for a company to no longer be associated to a device or product, but only for suing. Not the reputation i would like to have under my belt. This time though, the lawsuit filed against Google and Motorola Mobility didn’t come from Apple, nor did it come from Microsoft. In fact it didn’t spawn from any major company over any sort of patent or infringement. No, the latest suit was filed by John W. Keating.

Keating is a shareholder of Motorola Mobility and he is not a happy camper about the purchase by Google. He is suing Motorola Mobility itself, CEO Sanjay Jha, nine members of its board of directors, and even Google for failing to get a fair price on the deal. Here is a statement by Keating –

“The offered consideration does not compensate shareholders for the company’s intrinsic value and stand-alone alternatives going forward, nor does it compensate shareholders for the company’s value as a strategic asset for Google.”

Granted, Google is getting a heck of a deal. $12.5 billion is buying them a device manufacturer and a huge patent portfolio. The over all idea is to help fend off patent trolls an help protect Android and its community. The purchase price though comes out to $40 a share and is a 63% mark up from market closing on August 12th. Apparently that isn’t enough for Keating. He is filing this complaint on behalf of all Motorola Mobility share holders and wants to get it moved to a class action suit as soon as possible. If that wasn’t enough, he is also attempting to seek an order to prevent the acquisition from going through.

To add even more fuel to the fire, Standard & Poor has downgraded Google’s stock rating from “buy” to “sell”.

After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility (MMI 38, Hold), we see greater risk to the company and stock. We expect the transaction to be consummated next year, but later than early ’12, which GOOG indicated. Moreover, despite MMI’s extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues. We also believe the purchase of MMI would negatively impact GOOG’s growth, margins and balance sheet. Based on revised DCF analysis, we are cutting our 12-month target price to $500 from $700.

S&P doesn’t seem to have much confidence in the deal at all. I am pretty sure that this latest lawsuit filing from Keating isn’t going to help much either.

Source: ZDNet(1) and ZDNet (2)