Google Agrees to Buy Motorola Mobility for $12.5 Billion
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Google (NASDAQ:GOOG) stunned the high-tech world Aug. 15 with an offer to buy Motorola Mobility (NYSE:MMI) for $12.5 billion. The company's largest purchase ever should give the search engine much-needed patent protection.
Google agreed to pay $40.00 per share in cash, a premium of 63 percent over Motorola Mobility's Aug. 12 closing price. Ending regulatory approval, the bid is slated to close by the end of 2011 or in early 2012.
Motorola Mobility will remain a licensee of Android, which will remain available to other hardware makers under an open-source license. Google intends to run Motorola Mobility as a separate business. It remains to be seen how the Google acquisition of Motorola Mobility will impact the likes of Apple and Research in Motion, as well as smartphone manufacturers such as Samsung and HTC that have supported its Android OS.
Motorola Mobility in 2008 eschewed Windows Mobile phone development in favor of Android. The company rolled out the Motorola Droid, the first truly successful Android smartphone in November 2009, backed by a $100 million marketing campaign by carrier Verizon Wireless (NYSE:VZW).
The phone maker has pumped out more than a dozen Android devices in the last two years, including the recent Motorola Photon 4G on Sprint.
Motorola also suffered some misfortune with Android. The company in February of this year launched the first Android 3.0 "Honeycomb" tablet, which did not sell particularly well versus Apple's iPad. Motorola also struggled with 4G product creation, delaying the Motorola Droid Bionic launch from the second quarter to the third.