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HTC is halting trade of its shares in anticipation of expected takeover

Vlad Savov
Key Points
  • The company announced it is about to halt trading of its shares tomorrow in anticipation of a "major announcement."
  • HTC said it "does not comment on market rumor or speculation."
  • Earlier this month, the company was rumored to be in the final stages of negotiating a takeover with Google.

HTC, one of Taiwan's premier tech brands and a true pioneer in the development of the Android hardware ecosystem, has today announced it is about to halt trading of its shares tomorrow in anticipation of a "major announcement," as first reported by Bloomberg's Tim Culpan. Earlier this month, the company was rumored to be in the final stages of negotiating a takeover with Google, and today's news appears to be setting the stage for that buyout becoming official. Or it could be some anonymous asset-holding company buying up what's left of HTC, but the exciting scenario is definitely the one that involves Google.

The official HTC response to the reported negotiations was issued today in a boilerplate statement of "HTC does not comment on market rumor or speculation." But the facts of HTC's situation speak for themselves: the company has been operating at a loss for well over a year and, in spite of the excellence of its latest U11 flagship, wasn't looking likely to survive much longer without outside assistance.

Google and HTC already have a close working relationship, having collaborated on the Google Pixel and Pixel XL smartphones of last year. The latest rumors point to HTC also producing the 2017 Pixel, though LG is expected to take over responsibility for building the second-gen Pixel XL. In any case, acquiring HTC is almost a no-brainer for a Google that is intent on developing and expanding its own hardware division. Google previously owned Motorola for a brief period of time and seemed intent on the same goal, but that plan ultimately unravelled. What has happened since then is that Google re-hired the Motorola chief it once had, Rick Osterloh, and founded a separate hardware team under his stewardship. Claude Zellweger, the one-time chief designer of HTC Vive, is also now at Google, working on that company's Daydream virtual reality system.

It's not immediately obvious what, if anything, Google would be acquiring from HTC. It could be just the smartphone business or just the Vive VR division, with a total takeover of the entire company presently being considered the less likely scenario. It's also peculiar that HTC would give advance notice of halting trading — these moves are usually done immediately and designed to prevent shareholders from being freaked out by unfavorable news and rushing to sell off their stock. Is HTC foreshadowing unsavoury news for its stockholders? The most damaging thing for them would probably be the loss of the Vive VR unit, which has the greatest potential for growth.

Putting together a history of collaboration, similar goals in promoting VR and advancing smartphone design, and the favorable price of HTC's current shares makes an HTC buyout the logical move for Google. Of course, the thing that spoiled the Google-Motorola relationship — namely, Samsung's objection to Google invading its territory — could still pose an issue, though if Google's going to proceed with making Pixel phones, it's of only academic importance whether it owns the manufacturing company or not.

We'll have to wait and see the exact details of HTC's major announcement, which should coincide with the stop in share trading tomorrow.

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