Google has announced it will acquire Motorola Mobility in a deal worth $12.5bn. The search giant says the move will enable it to "supercharge" the Android ecosystem and boost its patent portfolio, protecting it from threats from Microsoft and Apple.
The cash deal is valued at $40 per share and represents a 63% premium on Motorola’s share price at the close of trading on Friday, August 12.
Google has highlighted the benefits to the Android operating system as one of the main benefits of the deal. In a blog post CEO Larry Page said the move will, "create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere."
"In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we’re thrilled at the success they’ve achieved so far. We believe that their mobile business is on an upward trajectory and poised for explosive growth," he continued.
Motorola Mobility focuses on smartphones and tablets. It was spun out from Motorola earlier this year.
Android will remain an open source platform, Google confirmed. Motorola will remain a licensee of Android and will be run as a separate platform.
It will be interesting to see what Google does with the hardware it will inherit. It has had a go before at releasing branded phones – the Nexus One and Nexus S, manufactured by HTC and Samsung respectively.
However it is likely that the patent portfolio included in the acquisition is the primary driving force from Google’s point of view. The recent war of words between Google, Microsoft and Apple in the increasingly fractious mobile space led the Mountain View-based firm to publicly attack a, "hostile, organised campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents."
Motorola’s patents offer Google a good base from which to defend itself, Page said: "Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."
The deal has sparked speculation that other handset manufactures such as Samsung, HTC and Sony Ericsson could be tempted to switch sides to Windows Phone. However Google has released statements from the bosses of these companies that appear to give a cautious backing to the deal.
"We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem, "said J.K. Shin, president, Samsung, Mobile Communications Division. HTC CEO Peter Chou released an almost identical statement.
LG and Sony Ericsson also backed the deal with near identical statements: "We welcome Google’s commitment to defending Android and its partners," is how Jong-Seok Park, president & CEO, LG Electronics Mobile Communications Company, put it.
Motorola’s share price climbed nearly 60% on the news, while Google’s dropped just over 2.5%. The deal is expected to close later this year or early next year.
