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Google to pay $12.5B for Motorola Mobility

Posted: 16 Aug 2011 ?? ?Print Version ?Bookmark and Share

Keywords:acquisition? mobile handset? patents? wireless standards?

Google Inc. has made its boldest and most ambitious step into the mobile handset space. The Web search giant has announced that it has signed a definitive agreement to buy Motorola Mobility Holdings Inc.

The acquisition is said to be worth $12.5 billion, with Google paying $40 per share for Motorola Mobility. This is a premium of 63 percent over the handset vendor's August 12 closing price of $24.47. Motorola Mobility's stock surged 56 percent right after the news came out.

Supercharging Android
According to Google, the move to buy Motorola Mobility will enable the company to "supercharge" its Android ecosystem, as well as enhance competition in mobile computing. Currently, there are more than 150 million Android devices worldwide through a network of around 39 manufacturers and 231 carriers in 123 countries.

Motorola Mobility is a founding member of the Android Open Handset Alliance and has a history of innovation in communications technology and products. The company is also known in the development of intellectual property that helped drive the revolution in mobile computing. In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices.

Under the terms of the agreement, Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business, Google said.

IHS weighs in
Google's acquisition of Motorola Mobility puts the company in a stronger position in any potential patent dispute with Apple, says market analyst IHS iSuppli. Read more about IHS' analysis of the Google-Motorola deal.

"Motorola Mobility's total commitment to Android has created a natural fit for our two companies," said Larry Page, Google co-founder and CEO, in a statement. "Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers."

In a blog posting, Page said the acquisition would strengthen Google's patent portfolio, enabling the firm to better protect Android from "anti-competitive threats from Microsoft, Apple and other companies." Page noted that Microsoft and Apple last month led a consortium of companies that banded together to buy a load of patents from Nortel Networks Corp. for $4.5 billion. Google claims this acquisition is part of anti-competitive behavior meant to squash the growth of the Android operating system, which is now the leading smartphone OS. A study by market research firm Canalys Ltd revealed that Android is found in 48 percent of smartphones in the second quarter of this year.

Google initially bid $900 million for the Nortel patents. And some analysts believe that Google is in desperate need of patents. There are reportedly more than 45 patent infringement lawsuits against Android and makers of Android devices.

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