Google to Buy Motorola Mobility for $12.5 Billion, Time Warner in $3 B Deal

Arthi Gupta
15 Aug, 2011
New York City

U.S. indexes rose after Japanese economy contracted much less than estimated. Google agreed to acquire Motorola Mobility in $12.5 billion deal. Time Warner Cable agreed to buy Insight for $3 billion. National Oilwell Varco signed $1.5 billion deal with Brazil-based Estaleiro Atlantico Sul.

[R]9:35 AM New York – U.S. indexes rose after Japan economy contracted much less than estimated. Google agreed to acquire Motorola Mobility in $12.5 billion deal. Time Warner Cable agreed to buy Insight for $3 billion. National Oilwell Varco signed $1.5 billion deal with Brazil-based Estaleiro Atlantico Sul.[/R]

U.S. indexes gained on better-than-estimated retail sales data last week and optimism of a recovery in economic growth.

The European indexes rose after the Swiss newspaper SonntagsZeitung reported on Sunday that the Swiss National Bank may set a lower limit for euro-franc exchange rate in an attempt to halt gains in the currency.

The Italian cabinet at an emergency meeting on Friday passed a €45 billion austerity plan that aims to meet budgetary requirements by the European Central Bank within two years. The cabinet agreed to €20 billion of cuts in 2012 and €25 billion in 2013.

The measures, which still need to be approved by the Italian parliament, include cuts to public employees and reduction in the number of local authorities and national festivities, together with a pension reform, solidarity taxes affecting high incomes and new liberalizations, ANSA news agency reported.

Asian markets traded higher after Japan''s GDP contracted 1.3% on an annual basis in the second quarter, following the downwardly revised 3.6% drop in the previous three months, the Cabinet Office said on Monday in a preliminary report.

Separately, Japan’s finance minister Yoshihiko Noda told the public broadcaster NHK over the weekend that the government would take further steps to weaken the yen as the strength of the currency poses a threat to the economy''s recovery.

The world economy is entering a new """"""""danger zone"""""""" with the recent financial market turbulence eroding investor confidence, World Bank President Robert Zoellick told reporters after addressing the Asia Society in Sydney on Sunday.

Google to Acquire Motorola Mobility

Google Inc. agreed to acquire Motorola Mobility Holdings, Inc. for $40 per share in cash, or a total of about $12.5 billion. The offer price of $40 per share represents a premium of 63.5% to the closing price of Motorola Mobility shares of $24.47 on Friday.

The largest acquisition to date will help Google to position its Android mobile platform against similar products from Microsoft and Apple.

Time Warner Cable to Acquire Insight

Time Warner Cable Inc. entered into a merger agreement with Insight Communications Company, Inc. under which Time Warner Cable will acquire Insight for $3 billion in cash.

Time Warner Cable believes that, after incurring onetime costs and capital expenditures, it will create annual cost efficiencies of approximately $100 million through programming expense savings and other cost reductions.

National Oilwell Varco Signs Deal with Brazil

National Oilwell Varco, Inc. signed contracts of approximately $1.5 billion to supply drilling equipment packages for seven drillships to Brazil-based Estaleiro Atlantico Sul, including drilling riser and pressure control equipment.

Spectris Acquires Omega Engineering

Spectris plc, the UK-based productivity-enhancing instrumentation and controls company agreed to acquire the Omega Engineering business for $475 million or about £290 million, on a debt and cash-free basis.

Spectris expects the acquisition to enhance adjusted earnings per share in the first full financial year of ownership.

Grainger Intends Buying Fabory Group

W.W. Grainger, Inc., a broad line supplier of maintenance, repair and operating products, announced its intention to acquire Fabory Group, the Netherlands-based distributor of fasteners and related MRO products for about $344 million or €242 million.

Interpublic Agrees for Partial Sale of Holdings in Facebook

Interpublic Group reached an agreement to sell approximately half of its holdings in Facebook, Inc. for net cash proceeds of $133 million in a privately negotiated transaction.

Nuance to Buy Loquendo

Nuance Communications, Inc. announced an agreement to acquire Loquendo, a wholly-owned subsidiary of Telecom Italia. Terms of the deal were not disclosed.

The combination would provide a range of solutions, delivering natural, conversational interactions for enterprise, mobile and automotive with a special focus on Europe and Latin America.

Earnings Review

Lowe''s Companies, Inc. ((LOW)), the home improvement retailer reported second quarter net sales rose 1.3% to $14.54 billion from $14.36 billion in the comparable period on comparable-store sales fall of 0.3%.

Net earnings in the quarter declined 0.2% to $830 million or 64 cents per diluted share compared to net earnings of $832 million or 58 cents per share last year.

SYSCO Corporation ((SYY)), the distributor of food and related products stated fourth quarter sales edged higher 0.7% to $10.42 billion compared with $10.35 billion in the fourth quarter of fiscal 2010 on comparable sales rise of 8.5%.

Net earnings in the quarter dipped 0.4% to $336.31 million compared with net earnings of $337.78 million in the prior-year quarter. Earnings per share for the recent quarter remained flat at 57 cents per diluted share.

The Estee Lauder Companies Inc. ((EL)), the cosmetics company fourth quarter net sales increased 12% to $2.06 billion from $1.84 billion in the comparable prior-year period. Net earnings in the quarter surged 72% to $41.1 million or 20 cents per diluted share compared to net earnings of $23.9 million or 12 cents per share last year.