The impact of a conglomerate merger on its vendors and rivals – a case study of Google's acquisition of Motorola

Junmao Chiu*, Huimin Chung, Yi Ning Yang

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

This study explores the valuation effects of the conglomerate merger on an acquiring firm and its stakeholders. We examine Google's acquisition of Motorola and the impact that it had on Google's vendors and rivals. The empirical results suggest that the announcement of this deal led to positive market reaction among Android's vendors, primarily due to Google's ability to use Motorola's extensive patent portfolio to help protect Android's vendors from a potential patent infringement war in the future. Our results also find that when the Open Handset Alliance members obtain help from Motorola's patents or get new technology, an increase in shareholder wealth among Android's vendors and a decrease in shareholder wealth among Android's rivals are likely to occur.

Original languageEnglish
Pages (from-to)176-189
Number of pages14
JournalTechnology Analysis and Strategic Management
Volume28
Issue number2
DOIs
StatePublished - 7 Feb 2016

Keywords

  • Conglomerate merger
  • Google
  • Motorola
  • rivals
  • stakeholders
  • vendors

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