Google pays $1.1 bn for HTC’s Pixel unit
Alphabet Inc’s Google said it would pay $1.1 billion for the division at Taiwan’s HTC Corp that develops the US firm’s Pixel smartphones.
The all-cash deal will see Google gain 2,000 HTC employees, roughly equivalent to one fifth of the Taiwanese firm’s total workforce. It will also acquire a non-exclusive license for HTC’s intellectual property and the two firms agreed to look at other areas of collaboration in the future.
While Google is not acquiring any manufacturing assets, the deal underscores a ramping up of its ambitions for Android smartphones at a time when consumer and media attention is largely focused on rival Apple Inc.
“Google has found it necessary to have its own hardware team to help bring innovations to Android devices, making them competitive versus the iPhone series,” said Mia Huang, analyst at research firm TrendForce.
The move is part of a broader and still nascent push into hardware that saw Google hire Rick Osterloh, a former Motorola executive, to run its hardware division last year.
It also comes ahead of new product launches on October 4 that are expected to include two Pixel phones and a Chromebook.
Pixel smartphones, only launched a year ago, have less than 1% market share globally with 2.8-million shipments, according to research firm IDC.
Google will be aiming not to repeat mistakes made when it purchased Motorola Mobility for $12.5 billion in 2012. It sold it off to China’s Lenovo Group Ltd for less than $3 billion two years later after Motorola failed to produce appealing products that could compete with iPhones.
This time around, however, the deal price tag is much smaller and the lack of manufacturing facilities also minimises risk.
Google’s strategy of licensing Android for free and profiting from embedded services like search and maps has made Android the dominant mobile operating system with some 89% of the global market, IDC said.
But it has long been frustrated by the emergence of variations of Android and the inconsistent experience that has produced.
Some analysts also questioned the wisdom of the deal given HTC’s long decline. The Taiwanese firm once sold one in 10 smartphones globally but has seen market share dwindle sharply in the face of competition from Apple, Samsung Electronics Co and Chinese rivals.
HTC shares were on a trading halt on Thursday. The stock has suffered steep declines over the past couple of years. It has fallen 12% so far this year and the company is worth around $1.9 billion.
HTC’s worldwide smartphone market share declined to 0.9% last year from a peak of 8.8% in 2011, according to IDC. Google’s Pixel had less than 1% market share since it was launched a year ago, with an estimated 2.8 million shipments, IDC estimates.
The transaction, which is subject to regulatory approvals, is expected to close by early 2018.
Evercore served as financial advisor to HTC and Lazard served as financial advisor to Google.
The appellate body of the National Company Law Tribunal (NCLT) has granted two Mistry family investment firms a waiver of the minimum shareholding requirement (of 10%) for filing a petition alleging mismanagement and oppression of minority shareholders at Tata Sons Ltd.
At the same time, the National Company Law Appellate Tribunal (NCLAT) dismissed a plea by Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd alleging oppression and mismanagement, saying the petition was not maintainable.
While granting the waiver from the shareholding limit, an NCLAT bench headed by chairperson SJ Mukhopadhyaya directed the Mumbai bench of the tribunal to issue notice to the respondents and hear arguments on the merits of the case, which it said should be disposed of in three months.
Tata Sons said it had taken note of the order and was examining it. If it wants to, the holding firm of the Tata Group could challenge it in the Supreme Court.
A spokesperson for Mistry’s office said in an e-mail that “the ruling of the National Company Law Appellate Tribunal is a welcome vindication of what we have stood for and the values for which we are pursuing the petition against oppression and mismanagement of Tata Sons Ltd.”
The two investment firms, controlled by the family of ousted Tata Sons chairman Cyrus Mistry, had appealed to the NCLAT in April against separate NCLT orders dismissing both petitions.
While the two Mistry firms did own 18.4% of ordinary equity shares of Tata Sons, their holding fell well below 10% when both equity and preference shares were taken into account. Their holding fell to 2.17% in total shareholding, Tata Sons said.
“An exceptional case needs to be made out under Section 244(1) to grant a waiver from the minimum shareholding requirement,” Mukhopadhyaya said.
As per the existing shareholding division of Tata Sons “there are 51 members in the company”, Mukhopadhyaya said.
“Out of these, the two majority shareholders—Ratan Tata and Narottam Sekhsaria—hold 31% and 17% each and as such none of the other 49 members would be eligible to move court at all if this requirement is imposed.”
Mistry was ousted as Tata Sons chairman on 24 October and was also removed as director on the board of the holding company.
A Tata Sons spokesperson said: “We strongly believe that the allegations made by the petitioners are without basis and incorrect. Tata Sons will continue to defend its position at all appropriate legal forums.”