Google buys Motorola mobile division for $12.5bn

Hours before the opening of US markets, Google announced in a press release that it had acquired Motorola Mobility for “a total of about US$12.5-billion”.

Motorola Mobility is the handset sub-division of Motorola, which spun-off from the parent company earlier this year and has been trading as an independent company.

The announcement follows a tumultuous week for the markets and states that the two companies have “entered into a definitive agreement under which Google will acquire Motorola Mobility”.

The statement goes on to add that the decision was unanimously accepted by the boards of both companies. Regulatory bodies in the US and Europe have to sign off on the deal before it is finalised at a yet to be determined date.

Surprise has been, however, been registered at the deal’s price tag.

Google states that the deal, priced at “US$40.00 per share in cash” is a “a premium of 63 percent to the closing price of Motorola Mobility shares on Friday, August 12, 2011”.

Speculation concerning any designs Google may have had for Motorola, either in whole or this unit in particular, first emerged in early 2010. When this speculation broke, neither company would comment.

In a post on Google’s official blog titled, “Supercharging Android”, Google CEO Larry page writes:

Since its launch in November 2007, Android has not only dramatically increased consumer choice but also improved the entire mobile experience for users. Today, more than 150-million Android devices have been activated worldwide—with over 550 000 devices now lit up every day—through a network of about 39 manufacturers and 231 carriers in 123 countries. Given Android’s phenomenal success, we are always looking for new ways to supercharge the Android ecosystem. That is why I am so excited today to announce that we have agreed to acquire Motorola.

Page goes on to “name names” saying of the tech titan’s rivals, “We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android”.

The explanation Page alludes to, was the unexpected swipe Google’s top lawyer made against Apple, Microsoft, and other competitors accusing them of colluding to impede the growth of Android by utilising underhanded legal tactics.

Analysts are already referring to the move as a “gamechanger” in the mobile world as Google –like Apple — moves to being a handset manufacturer and not just an operating system provider.