Search giant Google is buying phone company Motorola Mobility for $ 12.5 billion in cash, making this its biggest acquisition yet, if approved. The deal will boost Android, Google’s operating system for mobile devices.
The deal was announced Monday morning by Google CEO and co-founder Larry Page in a blog saying it will “supercharge the android ecosystem”. But, he clarified, Android will remain an open platform.
Since its launch in November 2007, Android is now installed in 150 million devices, with more than 550,000 devices added daily — through a network of about 39 manufacturers and 231 carriers in 123 countries.
Google is paying $ 40 a share in cash for Motorola, which, Google’s CFO Patrick Pichette said in a conference call for analysts and reporters, is a 63% premium on the mobile devices company’s stock.
The deal takes Google straight into telecommunications hardware business.
Both Page and Motorola CEO Sanjay Jha were on the same call and said they were excited by the possibilities opening up for both companies as a result of the deal – especially on account of Motorola’s drive into the living room.
Google has made little inroad into that territory, but will ride Motorola there. But there were other benefits.
“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,” said Page.
He said Android had been a target of anti-competitive attacks from both Microsoft and Apple in the past. “The US Department of Justice had to intervene in the results of one recent patent auction to ‘protect competition and innovation in the open source software community’,” he said.
Motorola holds 17,000 patents according to reports.
Motorola Mobility CEO Sanjay Jha hailed the “significant value” the transaction will bring to the firm’s stockholders, along with new opportunities. “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 mobile devices and home businesses.”
The deal 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 stockholders. The transaction is expected to close by the end of 2011 or early 2012.