Could the acquisition of HTC provide Alphabet with the resources to compete at the top of the smartphone market?
After mounting speculation, a $1.1 billion deal has been struck by Google to acquire a section of the HTC smartphone division.
The plan is that Google will not take a share in the company, while members of staff from the newly bought division will be moving to Silicon Valley. Google has shared a forecast that the deal will be concluded at the beginning of 2018.
Yesterday, HTC announced that it would be suspending shares in the company, fueling existing rumours of the potential deal that has now come to fruition.
September has seen increasingly growing speculation of a deal, with theories that Google could acquire the VR component, or even the entire company. Recently, the Commercial Times in Taiwan indicated that a deal could be nearing.
The Taiwanese Stock Exchange refused to shed any light on the rumoured scenario, saying that it “does not comment on market rumour or speculation,” as reported by the BBC.
Originally well known as a maker of devices for other companies, HTC is still carrying out this role to some extent, as it makes the Pixel, Alphabet’s own smartphone. If this is an influential factor in making the deal, Google may be looking gain greater freedom to experiment with the device.
HTC’s history as a smartphone leader alongside the likes of Apple may also be attractive to Google in terms of pursuing a position at the top for the Pixel. The HTC share price has experience a major collapse in the last year, slipping from 84 TWD down to 67 TWD.
Another recent example of a deal surrounded by rumour that turned out to be accurate was between UK payments leader Worldpay, and the US firm Vantiv.
In this instance however, Worldpay announced that it had received interest prior to details being formally announced, this had a significant impact on the share price.