Google has announced that it has acquired talent from HTC to bolster its own hardware team for the purposes of ramping up its “Made by Google” brand. The two companies have also entered into a non-exclusive license for the Taiwanese firm’s intellectual property.
The manufacturer has been involved with the making of the Pixel smartphones for the past two years and has played a pivotal production role in major Android releases like the Nexus One and the first-ever phone with the OS, the Dream or T-Mobile G1. Google has been asserting more control over design aspects of its own-brand hardware.
“These future fellow Googlers are amazing folks we’ve already been working with closely on the Pixel smartphone line,” said Rick Osterloh, Google’s senior vice president for hardware, “and we’re excited to see what we can do together as one team.”
It is assumed HTC is briefing investors of the same move. There has been no dollar amount referenced so far, though Reuters reports from a source that Google will pay $1 billion. It will not have a stake in the Taoyuan-based company. HTC will continue to operate in its own name. It suspended trading on its stock in Taipei for today in line with the announcement. It is also not known if it is still has intentions to divest itself from its VR venture, Vive.[alert variation=”alert-warning”]Update 2 (10:23pm ET): A joint press release states that the deal is worth about $1.1 billion.[/alert] [toggles behavior=”toggle”] [toggle title=”Joint Press Release”]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.
HTC Corporation aims to bring brilliance to life. As a global innovator in smart mobile devices and technology, HTC has produced award–winning products and industry firsts since its inception in 1997, including the critically acclaimed HTC One and HTC Desire lines of smartphones. The pursuit of brilliance is at the heart of everything we do, inspiring best–in–class design and game–changing mobile and virtual reality experiences for consumers around the world. HTC is listed on the Taiwan Stock Exchange (TWSE: 2498).www.htc.com.
Google’s mission is to organize the world’s information and make it universally accessible and useful. Through products and platforms like Search, Maps, Gmail, Android, Google Play, Chrome and YouTube, Google plays a meaningful role in the daily lives of billions of people and has become one of the most widely-known companies in the world. Google is a subsidiary of Alphabet Inc.
This press release contains forward‐looking statements which may include projections of future results of operations, financial condition or business prospects based on our own information and other sources. Actual results of operations, financial condition or business prospects may differ from those expressed or implied in these forward‐looking statements for a variety of reasons, including but not limited to market demand, price fluctuations, competition, international economic conditions, supply chain issues, exchange rate fluctuations and other risks and factors beyond our control. The forward‐looking statements in this release reflect the current belief of HTC as of the date of this release. HTC undertakes no obligation to update these forward‐looking statements for events or circumstances that occur subsequent to such date.
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[/toggle][/toggles] [alert variation=”alert-warning”]Update 3 (10:43pm ET): Title was changed.[/alert]