Google buys Motorola Mobility
Google today announced an agreement to pay $12.5 billion in cash to buy Motorola Mobility — the commercial mobile-device manufacturer that was separated from Motorola Solutions earlier this year — and make the software giant’s first significant entry into the hardware side of the commercial-device market.
Motorola Mobility has focused its product portfolio around Android, Google’s open-source operating system for mobile devices. Google CEO Larry Page said Motorola Mobility will continue to operate as a separate business unit and emphasized that the Android business strategy will remain intact after the merger.
“We built Android as an open platform, and it will stay that way,” Page said today during a conference call, which was webcast.
Page said he believes Motorola Mobility is “poised for tremendous growth” in the future. In addition, Motorola Mobility’s massive intellectual-property portfolio — 17,000 patents worldwide, with another 7,500 patents pending — was especially attractive to Google, which is facing legal challenges regarding the use of other intellectual property incorporated in the Android platform.
“It was imperative for Google to strengthen its [intellectual-property-rights] position to defend attacks from other companies,” said Ken Rehbehn, a principal analyst for Yankee Group Research.
Andy Rubin, Google’s senior vice president of mobile, acknowledged that acquiring Motorola Mobility’s intellectual property would play a role in “protecting the [Android] ecosystem” and offered the prospects of greater technical innovations in the future.
Unanimously approved by the boards of both companies, the deal calls for Google to acquire Motorola Mobility for $40 per share in cash — a 63% premium compared to the closing price of Motorola Mobility shares on Friday. The deal is expected to close late this year or early in 2012, pending expected approvals from Motorola Mobility customers and regulatory authorities.
“This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world,” Motorola Mobility CEO Sanjay Jha said during the conference call.
