Google in $12.5bn swoop for Motorola Mobility

Google has announced a sensational swoop for Motorola Mobility in a $12.5bn deal which will see the web firm move into the mobile hardware space for the first time and provide a ready avenue to accelerate the development of Android.

The deal, unanimously approved by both boards, will see Google pay a premium of 63 per cent on the closing price of Motorola Mobility shares on Friday, according to the firms.

The companies have already worked closely on the Android platform, and Google chief executive Larry Page explained that the acquisition will enable them to "create amazing user experiences that supercharge the entire Android ecosystem".

"In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we're thrilled at the success they've achieved so far. We believe that their mobile business is on an upward trajectory and poised for explosive growth," Page said in a blog post.

"Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work with Motorola and the industry to support our partners and co-operate with them to accelerate innovation in this space."

However, it may be in the hotly contested area of patent protection that Motorola really comes into its own for Google, which has already accused rivals including Apple and Microsoft of banding together to deny it Nortel's patents.

"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.

However, patent expert Florian Mueller told V3 that Motorola's portfolio may not be hugely useful to Google.

"Apparently Microsoft sued Motorola without being concerned about Motorola's own patent portfolio, and Apple became embroiled in litigation with Motorola later that same month," he said. "I wouldn't overestimate the strength of Motorola's patents."

Motorola Mobility came into being in January 2011 after Motorola was split into two separate organisations, the other being Motorola Solutions.

Motorola Mobility will remain a separate business and a licensee of Android, which has helped raise its fortunes in the smartphone market and halt a worrying slump.

The transaction is expected to close by the end of 2011 or early 2012.

15 Aug 2011