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Google agrees to buy Motorola Mobility for US$12.5 billion

The search engine giant, Google, recently announced that it is buying Motorola Mobility for approximately US$12.5 billion or US$40 per share, in cash. The price represents a premium of 63% to the closing market price of Motorola Mobility shares last Friday. This would be not a problem since Google has about US$39 billion in cash. The concluded transaction was unanimously approved by the boards of directors of both companies.

Larry Page, Co-founder and CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create better user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. The company looks forward to welcoming Motorolans to their family of Googlers.”

Google will run Motorola Mobility, a dedicated Android partner, as a separate business. Motorola Mobility will still be a licensee of Android and Android will remain open.

Sanjay Jha, CEO of Motorola Mobility, exclaimed, “This transaction offers significant value for Motorola Mobility’s stockholders and provides new opportunities for our employees, customers, and partners across the globe. We have shared a productive partnership with Google to advance the Android platform, and now through this combination we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home businesses.”

Andy Rubin, Senior Vice President of Mobile at Google, added, “We expect that this combination will enable us to do more for the Android ecosystem. However, our plans for Android are unchanged and Google remains fully committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our Android partners to develop and distribute innovative Android-powered mobile devices.”

In Google’s blog, Page writes that Google has bought Motorola not only because of its strength in Android smartphones and devices, but also for being a “market leader in the home devices and video solutions business.”

It is also a strategy to build up the company’s patent portfolio, he adds, as it will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other tech companies.”

According to Motorola Mobility’s site, they hold approximately 14,600 granted patents and 6,700 pending patent applications, worldwide, as of January 2011.

Some years ago, Motorola bet its future in the mobile devices market by fully adopting the Android OS, launched the “Droid” – initially on the Verizon network – on November 6, 2009. The “Droid X” and “Droid 2″ followed in 2010.

However, the transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility’s shareholders. The transaction is expected to close by the end of this year.