Mountain View, Calif. — Google made the largest acquisition in its entire history by purchasing Motorola Mobility for $12.5 billion, a move intended to reinforce and expand its catalog of intellectual property in the face of litigation and official investigations over its Android operating system. The deal is subject to regulatory approval, which may not be a mere formality in light of the Federal Trade Commission’s antitrust questioning of both Google and Android.
In a post on the company’s blog, Google CEO Larry Page wrote, “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.”
In a conference call with media and analysts, he strongly emphasized that Google will run Motorola Mobility as a completely separate business, so that the deal will not affect the openness of the Android platform, nor will it infringe on any other manufacturer’s relationship with Google and Android. Andy Rubin, senior vice president of mobile at Google, added that he had spoken with the “top five Android licensees” and that they all “showed enthusiastic support” for the acquisition.
Motorola was the first manufacturer to release an Android phone, and the relationship has been strong ever since. Motorola Mobility chief executive Sanjay Jha 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.”
He also said he believed the deal would play an important role in the future of IPTV, a subject very relevant to Google and its Google TV smart television initiative. Motorola Mobility is a market-leading developer of cable television set-top boxes and DVRs. Jha said he could see, “great convergence between the mobile world and the content that enters the home through the set-top box.”
Google will now have control over one of the world’s largest mobile manufacturers, allowing the giant to refine the Android device that will create bigger competition in the mobile arena. It also now has a direct in with cable set-top boxes, which could be a cozy fit for Google TV and Google+ in particular.
Under terms of the definitive agreement, Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63 percent to 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.
“Motorola’s total commitment to Android in mobile devices is one of many reasons that there is a natural fit between our two companies,” Page wrote. “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere. The combination of Google and Motorola will not only supercharge Android, but will also enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences. I am confident that these great experiences will create huge value for shareholders.”
Chris Marlowe contributed to this story.
Google blog post – http://tinyurl.com/42ht84d
Google investor relations – http://tinyurl.com/439yh29
Financial Times’ live blog – http://tinyurl.com/3e6ww8e
WSJ.com’s Deal Journal – http://tinyurl.com/3lfjh6s