Google is buying US handset maker Motorola Mobility for $12.5 billion, giving the Internet giant a strong patent portfolio to defend its Android mobile operating system against rivals.
Google and Motorola Mobility announced they have entered into an agreement under which the Internet titan will buy Motorola Mobility for $40.00 per share in cash, a 63 percent premium over the closing price of Motorola Mobility shares on Friday.
They said the boards of directors of both companies have unanimously approved the deal, Google’s largest acquisition ever.
Under the agreement, Motorola Mobility will remain an Android licensee and Google will run the unit as a separate business.
“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies,” Google chief executive and co-founder Larry Page said in a statement.
“Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers,” Page said. “I look forward to welcoming Motorolans to our family of Googlers.”
Page said the deal will help protect Android against patent lawsuits targeting the open-source mobile operating system Google provides to handset makers for free.
“We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android,” 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.”
Earlier this month, Google accused Apple, Oracle, Microsoft and other firms of using “bogus patents” to wage a campaign against Android.
The company bid earlier this year for 6,000 patents held by bankrupt Canadian firm Nortel but lost out to a consortium made up of Apple, EMC, Ericsson, Microsoft, Blackberry maker Research in Motion and Japan’s Sony.
In a conference call with financial analysts, Motorola Mobility chief executive Sanjay Jha said the US maker of smartphones and touchscreen tablet computers has over 17,000 issued patents and another 7,500 pending.
Jha said the Google acquisition will bring “significant value” to Motorola Mobility’s shareholders, 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 our mobile devices and home businesses,” Jha said.
Google’s chief legal officer David Drummond said the acquisition will require regulatory approvals in the United States, the European Union and elsewhere but he expects it to receive the green light.
“We believe very strongly that this is a pro-competition transaction,” Drummond said.
The purchase will also require the approval of Motorola Mobility shareholders.
Andy Rubin, senior vice president of mobile at Google, said the Mountain View, California, company will continue to provide Android to other handset makers.
“It’s business as usual for Android,” Rubin said. “I see (the Motorola Mobility purchase) as basically protecting the ecosystem and extending it as well.
“Our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community,” he added.
Page, the Google CEO, also stressed in the conference call with analysts that there would be “no change in how we’re running Android.
“Android is still open,” he added. “The partners are very excited about this.”