Google and HTC have just announced that they are entertaining into a cooperation agreement. This essentially means that Google is spending $1.1 Billion on acquiring HTC’s Smartphone Team and a bunch of their intellectual property. This sale or acquisition has been rumored for a few weeks and comes just before Google’s October 4th event.
The smartphone team being acquired is the HTC team that has largely worked on the Pixel smartphones. This makes this a key acquisition, as Google is keeping their eyes locked on hardware and will likely continue for many years. I should also note that HTC made the first Android smartphone way back when and this is another step in the relationship between the two companies.
While HTC will still have some of its internal smartphone business, it will let them focus on the VIVE team, along with future products that fall under the realm of the internet of things. For Google, they are bringing the hardware team focused on the Pixel series in-house and is investing to an international technology company.
Google and HTC are expecting this transaction to close in early 2018 and it is still subject to regulatory approvals and customary closing conditions
Google and HTC Announce US$1.1 Billion Cooperation Agreement
Certain HTC Employees – Many of Whom Worked on Pixel Smartphones – to Join Google Google Receives HTC IP through Non-Exclusive Licensing Agreement
Transaction Reinforces HTC’s Commitment to Innovation and Its Branded Smartphone Business
MOUNTAIN VIEW, Calif. and TAIPEI, Taiwan– September 21, 2017 – Google (NASDAQ: GOOG, GOOGL) and HTC Corporation (TWSE: 2489) today announced a definitive agreement under which certain HTC employees – many of whom are already working with Google to develop Pixel smartphones – will join Google. HTC will receive US$1.1 billion in cash from Google as part of the transaction. Separately, Google will receive a non-exclusive license for HTC intellectual property (IP).
The agreement is a testament to the decade-long strategic relationship between HTC and Google around the development of premium smartphones.
This agreement also supports HTC’s continued branded smartphone strategy, enabling a more streamlined product portfolio, greater operational efficiency and financial flexibility. HTC will continue to have best-in-class engineering talent, which is currently working on the next flagship phone, following the successful launch of the HTC U11 earlier this year. HTC will also continue to build the virtual reality ecosystem to grow its VIVE business, while investing in other next- generation technologies, including the Internet of Things, augmented reality and artificial intelligence.
For Google, this agreement further reinforces its commitment to smartphones and overall investment in its emerging hardware business. In addition to the talented and experienced team of professionals, Google will continue to have access to HTC’s IP to support the Pixel smartphone family. Additionally, this agreement also represents a significant investment by Google in Taiwan as a key innovation and technology hub.
“As a pioneer of the smartphone market, we are very proud of our history of innovation. Our unmatched smartphone value chain, including our IP portfolio, and world-class talent and system integration capabilities, have supported Google in bolstering the Android market,” said Cher Wang, Chairwoman and CEO of HTC. “This agreement is a brilliant next step in our longstanding partnership, enabling Google to supercharge their hardware business while ensuring continued innovation within our HTC smartphone and VIVE virtual reality businesses. We believe HTC is well positioned to maintain our rich legacy of innovation and realize the potential of a new generation of connected products and services.”
“HTC has been a longtime partner of Google and has created some of the most beautiful, premium devices on the market,” said Rick Osterloh, Senior Vice President of Hardware at Google. “We’re excited and can’t wait to welcome members of the HTC team who will be joining Google to fuel further innovation and future product development in consumer hardware.”
The transaction, which is subject to regulatory approvals and customary closing conditions, is expected to close by early 2018.
Evercore served as financial advisor to HTC and Gibson Dunn and Tsar & Tsai acted as legal counsel. Lazard served as financial advisor to Google and Cleary Gottlieb and Lee & Li acted as legal counsel.