Cyanogen Spurns Google Acquisition Interest, Seeks $1 Billion Valuation

A startup that distributes smartphone software based on Google’s Android mobile operating system recently drew attention from Google’s rivals, including Microsoft, Amazon and Yahoo. Now it’s gotten Google’s attention, too.

The Palo Alto- and Seattle-based company, called Cyanogen, is discussing a Series C round of financing with late-stage investors and some major tech firms. It is seeking a valuation close to $1 billion, despite barely generating any revenue. Several potential investors involved in those talks say the company’s chief executive disclosed to existing shareholders that Sundar Pichai, who oversees Google’s Android team, expressed interest in acquiring the firm during a recent meeting with Cyanogen’s leadership.

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But if Cyanogen strays too far from Google’s requirements for Android, and Google doesn’t make its services available for Cyanogen-powered devices, the startup will have to recreate some of the Google technology and services that currently power Android devices above the kernel level, likely through partnerships with other app makers. Outside of China, developing an app store to rival Google Play would be a major challenge.

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Cyanogen has told potential investors it has a deal to make phones with India-based manufacturer Micromax, which could be released later this year, according to people involved in the fundraising discussions.