NEW YORK (Reuters) - Google Inc would pay Motorola Mobility Holdings Inc a whopping $2.5 billion if it decided to walk away from its proposed $12.5 billion acquisition of Motorola, a source close to the situation said.
The reverse break-up fee represents 20 percent of the total size of the deal, announced Monday.
On the other side, if Motorola were to decide not to go through with the deal, it would have to pay Google a $375 million break-up fee, the source said. That represents 3 percent of the deal valuation of $12.5 billion.
Google said on Monday it would buy phone hardware maker Motorola Mobility to bolster adoption of its Android mobile software and compete with smartphone rival Apple Inc.
In its biggest deal to date, Google said it would pay $40 per share in cash, a 63 percent premium to Motorola Mobility’s Friday closing price on the New York Stock Exchange.
Lazard advised Google on the deal, while Motorola used Centerview Partners and Frank Quattrone’s Qatalyst Partners, sources told Reuters.
Reporting by Nadia Damouni, editing by Gerald E. McCormick