Google agreed to acquire Motorola Mobility for $12.5 billion, a move to protect Android from the rampant patent infringement litigation and give Google a hardware counterpart to Apple.
Google (NASDAQ:GOOG) stunned the high-tech world Aug.
15 with an offer to buy Motorola Mobility (NYSE:MMI) for $12.5 billion. The company's largest purchase ever should give the search engine
much-needed patent protection.
Google agreed to pay $40.00 per share in cash
, a premium of 63 percent over
Motorola Mobility's Aug. 12 closing
price. Pending regulatory approval, the bid is slated to close by the end of
2011 or in early 2012.
Motorola Mobility will remain a licensee of Android,
which will remain available to other hardware makers under an open-source
license. Google intends to run Motorola Mobility as a separate business.
Motorola Mobility in 2008 eschewed Windows Mobile phone
development in favor of Android. The company rolled out the Motorola Droid, the
first truly successful Android smartphone in November 2009, backed by a $100
million marketing campaign by carrier Verizon Wireless (NYSE:VZW).
maker has pumped out more than a dozen Android
devices in the last two years, including the recent Motorola Photon 4G on
Motorola also suffered some misfortune with Android. The
company in February of this year launched the first Android 3.0
"Honeycomb" tablet, which did not sell particularly well versus
Apple's iPad. Motorola also struggled with 4G product creation, delaying the
Motorola Droid Bionic launch from the second quarter to the third.
With Android rising to capture 40 percent market share in
the United States and more worldwide, the phone maker was also sued for patent
infringement by Microsoft
Those suits underscore the current climate of Android, over
which Apple has also sued HTC, Samsung, and Barnes & Noble for their use of
technology in Android devices.
Microsoft and Apple have also ganged up on
Google to acquire patents from Nortel Networks, ideally for the purpose of
keeping the technology rights away from patent-poor Google.
The patent wars and the ability to own and control an Android
hardware maker are what made Google pull the trigger on this deal, as Google
CEO Larry Page said it will entitle him to "supercharge the Android
ecosystem and will enhance competition in mobile computing."
"Motorola Mobility's total commitment to Android has
created a natural fit for our two companies," Page added. "Together,
we will create amazing user experiences that supercharge the entire Android
ecosystem for the benefit of consumers, partners and developers. I look forward
to welcoming Motorolans to our family of Googlers."
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