public class MainActivity extends Activity {
    ImageView imageView;
    ImageView dragHandle;
    RelativeLayout layout;

    @Override
    protected void onCreate(Bundle savedInstanceState) {
        super.onCreate(savedInstanceState);
        setContentView(R.layout.activity_main);
        imageView = (ImageView) findViewById(R.id.imageView1);
        imageView.setBackgroundColor(Color.MAGENTA);
        dragHandle = (ImageView) findViewById(R.id.imageView2);
        dragHandle.setBackgroundColor(Color.CYAN);
        layout = (RelativeLayout) findViewById(R.id.relativeLayout2);
        layout.setBackgroundColor(Color.YELLOW);
        setUpResize();

    }

    public void setUpResize() {
        dragHandle.setOnTouchListener(new View.OnTouchListener() {

            float centerX, centerY, startR, startScale, startX, startY;

            float startAngle;
            float zeroAngle;
            int firstPointX;
            int firstPointY;

            public boolean onTouch(View v, MotionEvent e) {

                if (e.getAction() == MotionEvent.ACTION_DOWN) {

                    // calculate center of image
                    centerX = (imageView.getLeft() + imageView.getRight()) / 2f;
                    centerY = (imageView.getTop() + imageView.getBottom()) / 2f;

                    // recalculate coordinates of starting point
                    startX = e.getRawX() - dragHandle.getX() + centerX;
                    startY = e.getRawY() - dragHandle.getY() + centerY;

                    // get starting distance and scale
                    startR = (float) Math.hypot(e.getRawX() - startX, e.getRawY() - startY);
                    startScale = imageView.getScaleX();

                    /*
                     * Rotate code
                     */

                    int[] locationOfLayout = new int[2];
                    int[] locationOfDrag = new int[2];

                    layout.getLocationOnScreen(locationOfLayout);
                    dragHandle.getLocationOnScreen(locationOfDrag);

                    firstPointX = locationOfLayout[0];
                    firstPointY = locationOfLayout[1];

                    float secondPointX = e.getRawX();
                    float secondPointY = e.getRawY();

                    zeroAngle = findRotation(firstPointX, firstPointY, secondPointX, secondPointY); // remember
                                                                                                    // "zero"
                                                                                                    // angle
                    startAngle = layout.getRotation(); // remember angle at
                                                        // which layout is
                                                        // rotated at the start

                } else if (e.getAction() == MotionEvent.ACTION_MOVE) {

                    // calculate new distance
                    float newR = (float) Math.hypot(e.getRawX() - startX, e.getRawY() - startY);

                    // set new scale
                    float newScale = newR / startR * startScale;
                    imageView.setScaleX(newScale);
                    imageView.setScaleY(newScale);

                    // move handler image
                    dragHandle.setX(centerX + imageView.getWidth() / 2f * newScale);
                    dragHandle.setY(centerY + imageView.getHeight() / 2f * newScale);

                    /*
                     * Rotate code
                     */

                    layout.setRotation(findRotation(firstPointX, firstPointY, e.getRawX(), e.getRawY()) - zeroAngle
                            + startAngle); // rotate relative to start and zero
                                            // angle

                } else if (e.getAction() == MotionEvent.ACTION_UP) {

                }
                return true;
            }
        });
    }

    private float findRotation(float firstPointX, float firstPointY, float secondPointX, float secondPointY) {
        double delta_x = (secondPointX - firstPointX);
        double delta_y = (secondPointY - firstPointY);
        double radians = Math.atan2(delta_y, delta_x);
        return (float) Math.toDegrees(radians);
    }
}

<RelativeLayout xmlns:android="http://schemas.android.com/apk/res/android"
    xmlns:tools="http://schemas.android.com/tools"
    android:layout_width="match_parent"
    android:layout_height="match_parent" >

    <RelativeLayout
        android:id="@+id/relativeLayout2"
        android:layout_width="match_parent"
        android:layout_height="match_parent"
        android:layout_centerInParent="true" >

        <ImageView
            android:id="@+id/imageView1"
            android:layout_width="wrap_content"
            android:layout_height="wrap_content"
            android:layout_centerHorizontal="true"
            android:layout_centerVertical="true"
            android:src="@drawable/ic_launcher" />

        <ImageView
            android:id="@+id/imageView2"
            android:layout_width="20dp"
            android:layout_height="20dp"
            android:layout_below="@+id/imageView1"
            android:layout_toRightOf="@+id/imageView1"
            android:src="@drawable/meanicons" />

    </RelativeLayout>

</RelativeLayout>

public void setUpResize() {
    dragHandle.setOnTouchListener(new View.OnTouchListener() {

        float centerX, centerY, startR, startScale, startX, startY, startRotation, startA ;

        public boolean onTouch(View v, MotionEvent e) {

            if (e.getAction() == MotionEvent.ACTION_DOWN) {

                centerX = (imageView.getLeft() + imageView.getRight()) / 2f;
                centerY = (imageView.getTop() + imageView.getBottom()) / 2f;

                startX = e.getRawX() - dragHandle.getX() + centerX;
                startY = e.getRawY() - dragHandle.getY() + centerY;

                startR = (float) Math.hypot(e.getRawX() - startX, e.getRawY() - startY);
                startA = (float) Math.toDegrees(Math.atan2(e.getRawY() - startY, e.getRawX() - startX));

                startScale = imageView.getScaleX();
                startRotation = imageView.getRotation();

            } else if (e.getAction() == MotionEvent.ACTION_MOVE) {

                float newR = (float) Math.hypot(e.getRawX() - startX, e.getRawY() - startY);
                float newA = (float) Math.toDegrees(Math.atan2(e.getRawY() - startY, e.getRawX() - startX));
                float newScale = newR / startR * startScale;
                float newRotation = newA - startA + startRotation;

                imageView.setScaleX(newScale);
                imageView.setScaleY(newScale);
                imageView.setRotation(newRotation);


                // ----- this part takes some effort to understand... ------
                dragHandle.setX((float) (centerX + Math.hypot(imageView.getWidth(), imageView.getHeight())/2f * newScale
                        * Math.cos(Math.toRadians(newRotation) + Math.atan2(imageView.getHeight(), imageView.getWidth()))));

                dragHandle.setY((float) (centerY + Math.hypot(imageView.getWidth(), imageView.getHeight())/2f * newScale
                        * Math.sin(Math.toRadians(newRotation) + Math.atan2(imageView.getHeight(), imageView.getWidth()))));
                //-----------------------------------------------------------

                dragHandle.setPivotX(0);
                dragHandle.setPivotY(0);
                dragHandle.setRotation(newRotation);


            } else if (e.getAction() == MotionEvent.ACTION_UP) {

            }
            return true;
        }
    });
}

Math.hypot(imageView.getWidth(), imageView.getHeight()) / 2f * newScale

Math.atan2(imageView.getHeight(), imageView.getWidth())

Math.cos(Math.toRadians(newRotation) + Math.atan2(imageView.getHeight(), imageView.getWidth()))