Subsequent Events
Acquisition of Nest
In January 2014, we entered into an agreement to acquire 100% of Nest Labs, Inc. (Nest), a company whose mission is to reinvent devices in the home such as thermostats and smoke alarms, for a total purchase price of $3.2 billion in cash, subject to adjustments. Prior to this transaction, we had an approximately 12% ownership interest in Nest, which was net against the total consideration. We expect that the acquisition will enhance Google's suite of products and services and allow Nest to continue to innovate upon devices in the home, making them more useful, intuitive, and thoughtful, and to reach more users in more countries. The transaction closed on February 7, 2014.
This transaction is considered a “step acquisition” under GAAP whereby our ownership interest in Nest held before the acquisition is required to be remeasured to fair value at the date of the acquisition. The gain as a result of remeasurement will be included in “interest and other income, net” on our Consolidated Statement of Income in the first quarter of 2014.
We are currently in the process of valuing the assets acquired and liabilities assumed in the transaction, and determining the fair value of our previously held ownership interest at the acquisition date. We will provide all required disclosures upon the completion of the valuation in the first quarter of 2014.
Divestiture of Motorola Mobile
On January 29, 2014, we entered into an agreement with Lenovo Group Limited (Lenovo) providing for the disposition of the Motorola Mobile segment for a total purchase price of approximately $2.9 billion (subject to certain adjustments), including $1.4 billion to be paid at close, comprised of $660 million in cash and $750 million in Lenovo ordinary shares (subject to a share cap and floor). The remaining $1.5 billion will be paid in the form of an interest-free, three-year prepayable promissory note.
We will maintain ownership of the vast majority of the Motorola Mobile patent portfolio, including current patent applications and invention disclosures, which will be licensed back to Motorola Mobile for its continued operations. Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio. Additionally, in connection with the sale, we will indemnify Lenovo for certain potential liabilities of the Motorola Mobile business. The transaction is subject to the satisfaction of regulatory requirements, customary closing conditions and any other needed approvals and is expected to close in 2014.
As we evaluate the impact of this agreement, we expect financial results of Motorola Mobile will be presented as net income (loss) from discontinued operations on the Consolidated Statement of Income and assets and liabilities of Motorola Mobile to be disposed of will be presented as held for sale on the Consolidated Balance Sheets beginning in the first quarter of 2014.
We are in the process of evaluating the transaction and its impact on our financial statements, including evaluating the resulting gain or loss that will be recognized, based on all the terms of the agreement. The following table presents our best estimate of the aggregate carrying amounts of the major classes of assets and liabilities related to the Motorola Mobile segment to be disposed of as of December 31, 2013 (in millions):
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| | | | |
Assets: | | |
Cash and cash equivalents | | $ | 160 |
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Accounts receivable | | 783 |
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Inventories | | 178 |
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Deferred income taxes, net | | 241 |
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Prepaid and other current assets | | 919 |
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Property and equipment, net | | 425 |
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Intangible assets, net | | 959 |
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Other assets, non-current | | 325 |
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Total assets | | $ | 3,990 |
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Liabilities: | | |
Accounts payable | | $ | 1,132 |
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Accrued expenses and other liabilities | | 1,531 |
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Total liabilities | | $ | 2,663 |
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