Following the split of Motorola to form Motorola Mobility and Motorola Solutions earlier this year, Motorola Mobility has been acquired by Google. This is Google's biggest acquisition and signals its intention to become as dominant in the smartphone market as it is in search.
The $40.00 per share price paid by Google represents a premium of 63% on the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies and values Motorola Mobility at $12.5B US.
Motorola Mobility is an Android partner that Google says will enable them to "supercharge the Android ecosystem and will enhance competition in mobile computing". Google says that it will run Motorola Mobility as a separate business, maintaining it as a licensee of Android.
According to a press release 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.'
Andy Rubin, Senior Vice President of Mobile at Google, said, 'our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.'
Page says in a blog post that the acquisition is part of Google's response to "anti-competitive patent attacks on Android" by Apple and Microsoft. Part of the rationale behind this acquisition is that Google gets access to a substantial patent portfolio.
After huge success in the handset market with the RAZR, Motorola saw its sales flag as it almost totally missed the smartphone revolution. The purchase of Motorola Mobility by Google parallels the partnership between Microsoft and Nokia as both companies continue to fight Apple's iOS onslaught.
Although sales of Android handsets have overtaken the iPhone, Google now gets the Xoom tablet as well as substantial experience in the handset market. These will provide Google with an experienced hardware development department.
It will be interesting to see if this signals a shift to a more vertically integrated Android business from Google.
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