Google Buys Motorola for $12.5 billion

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Wow ! Finally now Google directly entered in to mobile manufacturing business,  Today Google announced that it is buying  mobile phone make Motorola Mobility or Motrola for $12.5 billion in cash.According Business sources this acquisition is said to be the  company’s biggest deal  till date.

Google will pay $40 per share, which is a 63 percent premium to Motorola’s closing price on Friday,August 12, 2011. This deal has been unanimously approved by the boards of directors of both companies.

Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. 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.”

Sanjay Jha, CEO of Motorola Mobility, said, “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. 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.”

However Google acquiring Motorola will pose a question mark on Android openness and this deals creates some doubts for Android mobile manufactures like Samsung,HTC.But Google CEO Larry Page said that they will run Motorola Mobility as a separate business that remains one of the licensees of Android and Android platform which will stay open for all hardware partners.

I also think that this  acquisition by Google is only aimed to deal ever-increasing patent problems which are posing threat to Android growth.

One of Android’s biggest weaknesses are their lack of patents in the mobile space. Google is starting to get inundated with lawsuits, and unfortunately, these lawsuits don’t just get directed at Google but also the companies that are using the Android operating system on their devices.

Earlier this year, Google missed out on acquiring the Nortel patents to a consortium involving Apple, Microsoft, RIM, and other large companies. Earlier in August, Google complained on its blog about companies bidding on Nortel’s patents as a means of competing with Android and Microsoft had already successfully sued to get $5 per handset from some Android devices.

So Google NEEDS to build up their mobile patent defenses and buying Motorola, which holds some 25,000 patents will surely be able to help Google fend off attacks from Microsoft and Apple.

Larry Page, CEO of Google, 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”.

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility’s stockholders. The transaction is expected to close by the end of 2011 or early 2012.

Interestingly, shares of Google down around 2.85 percent at the time of this post, while Motorola Mobility’s stock jumped 56 percent.

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