How the Google Deal Hampers Motorola

Google may have been O.K. with paying a large reverse termination fee in its deal to buy Motorola Mobility for $12.5 billion.

I postulated it was a way for the Internet company to stare down antitrust regulators. The $2.5 billion breakup fee was also probably driven by Google’s likely refusal of a “hell or high water” provision.

But while Motorola may have pushed for the high fee in exchange, the company must put up with a lot in the meantime. The acquisition agreement sharply regulates how Motorola can run its business in ways beyond normal deal terms.

It prohibits Motorola from:

1) terminating any employee at or above the level of corporate vice president without consulting Google

2) increasing salaries and benefits for employees at or above the level of corporate vice president by more than 5 percent in any year period

3) substantially changing Motorola’s option and other incentive plan systems no matter how many times headhunters call

4) making capital expenditures greater than $50 million individually and $225 million in the aggregate in 2012

5) making any acquisition of more than $150 million

6) incurring debt greater than $250 million

These are very tight restrictions and will keep Motorola on a very short leash, dependent upon Google until this acquisition closes.