Google has acquired Motorola Mobility for $40 per share, or $12.5bn total.
The $12.5bn acquisition is a key moment for Google, as it marks the search giant’s most major acquisition in its history. Despite fears that Google will use Motorola Mobility’s hardware to vertically integrate its Google’s Android OS product ecosystem (similar to Apple’s iPhone and iPad) at the expense of other hardware suppliers, Google’s CEO Larry Page has assured the market that Google will run Motorola Mobility as a separate business.
Motorola Mobility will remain a licensee of Android and the Android will remain an open platform.
"I’m happy to announce the deal has closed. Motorola is a great American tech company, with a track record of over 80 years of innovation. It’s a great time to be in the mobile business, and I’m confident that the team at Motorola will be creating the next generation of mobile devices that will improve lives for years to come," said Page.
The current CEO of Motorola Mobility Sanjay Jha, will be stepping down. Jha will receive a $66m golden parachute payment in shares and cash as severance. Google’s Dennis Woodside will take over as CEO. He oversaw the takeover talks on Google’s behalf, and previously served as President of Google’s Americas region.
"Motorola literally invented the entire mobile industry with the first-ever commercial cell phone in 1983. Thirty years later, mobile devices are at the center of the computing revolution. Our aim is simple: to focus Motorola Mobility’s remarkable talent on fewer, bigger bets, and create wonderful devices that are used by people around the world," Woodside said.
Woodside has already hired a host of new heavyweight staff for Motorola’s executive team, symbolic of the focus Google is now throwing at mobile. This includes Regina Dugan (former Director of DARPA), Mark Randall (former supply chain VP at Amazon and previously at Nokia), Vanessa Wittman (former CFO of Marsh & McLennan), Scott Sullivan (former head of HR at Visa and NVIDIA), and Gary Briggs (former Google VP of Consumer Marketing).
Google/Motorola Mobility will retain Iqbal Arshad (Product Development), Marshall Brown (Chief of Staff), Fei Liu (Mass Market Products), Dan Moloney (Home), Scott Offer (General Counsel), Mark Shockley (Sales), Mahesh Veerina (Software & Enterprise) and Jim Wicks (Consumer Experience Design).
"Motorola Mobility has many outstanding leaders, including people who were behind the original RAZR in 2004 and recent successes like the Droid and RAZR MAXX. Our colleagues joining the team come from varied backgrounds, from DARPA to Amazon and NVIDIA, but they all share a track record of leading innovation at speed, and a great deal of excitement about the mission ahead," Woodside said.
The deal was first announced in August 2011, but had to jump regulatory hurdles in both the EU and US. Competitors and activists alike argued that it was centralising too much power in Google’s hands. Both authorities determined that the takeover was not anti-competitive.
Motorola Mobility has struggled of late, caught up in the same storm that has crushed fellow mobile luminaries Nokia, RIM, LG and Sony Mobile – the rise of the smartphone in 2007, lead by the iPhone and (later) Google Android based devices, especially Samsung’s Galaxy series.
After a rough quarter, Motorola Mobility’s economic woes would appear to be over, nestled in Google’s bosom.
Google has bought the company as much for its patent portfolio dating back to the dawn of the mobile phone era. As one of the pioneers of mobile phone technology, Motorola should give Google a significant leg up in its various patent battles running all around the world.
Whether these rivals will be happy with a newly high powered competitor, will be one of the interesting stories to watch over the next 18 months.
The takeover will also be key for Google to use its now Apple-esque vertical integration to push into the tablet market, almost completely dominated by Apple’s iPad, after a host of failures on the Android platform. Google believes it can ‘lead by example’. It also bodes well to protect itself from the launch of the tablet-centric Windows 8 later this year, which is Microsoft’s attempt to build a viable iPad competitor OS.
