Google to acquire Motorola Mobility for $12.5 billion

Manufacturer to continue to operate independently

Google to acquire Motorola Mobility for $12.5 billion
A matter of days after Motorola Mobility CEO Sanjay Jha was talking up the possibility of working on Windows Phone to back up its hardware business, Google has announced it is to acquire the company for a total of $12.5 billion.

The purchase will cement Motorola's position as a "dedicated Android partner", Google said in a statement, allowing the platform holder to "supercharge the Android ecosystem".

Cash converters

The business, which will be run independently of Google's main thread, will be acquired for $40 per share in cash – equivalent to 63 percent of the company's closing price on Friday August 12.

"Motorola Mobility's total commitment to Android has created a natural fit for our two companies," said Google CEO Larry Page.

"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."

Patent power

Attention will now turn to the reasons behind the acquisition. While Motorola remains a major Android manufacturer, it hasn't been in a stable financial position of late.

In its most recent quarter, Motorola posted a $56 million loss, prompting Jha to talk up the possibility of developing Windows Phone manufacturers or, more controversially, hitting rival Android OEMs for royalties thanks to the firm's significant patent library.

While it's not clear whether Google would risk tapping up existing Android manufacturers in such a way, Motorola is also in the process of suing rival Apple in the US over more than 40 patents.

In response, Apple has begun legal action against the firm in Germany, claiming the design of its Android tablet Xoom apes that of iPad too closely.

Eyes on Android

Jha, however, is billing Google's swoop for his company as a vote of confidence.

"This transaction offers significant value for Motorola Mobility's stockholders and provides compelling new opportunities for our employees, customers, and partners around the world," he said of the deal.

"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."

Motorola Mobility was spun off from Motorola's main business earlier this year.

[source: Google]

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.