The race for smartphone dominance is a tight one. Google, while enjoying much success with the Android platform with over 150 million Android devices activated worldwide to date, isn’t quite resting on its laurels. In a shocking move today, the internet search giant has announced that it is acquiring Motorola Mobility for $12.5 billion in cash. The takeover will boost Google’s dominance in the smartphone market. The $40 per share deal is at a 63% premium on Motorola Mobility’s closing price on the NYSE, Google’s biggest acquisition to date.
Motorola Mobility has been a dedicated Android partner, choosing a one OS strategy for its smartphone and tablet devices. The maker of cutting edge Droid and Defy smartphones and the world’s first Honeycomb-powered tablet – Motorola Xoom, will be run as a separate business from Google and will remain a licensee of Android. Most importantly, stressed Google, is that Android will remain an open platform.
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In Q2 2011, Motorola Mobility posted a rise of 28% in revenues to $3.3 billion. However, the company suffered a net loss worth $56 million down from a profit worth $80 million the previous year. The handset division suffered an operating loss of $85 million. Motorola Mobility shipped 11 million mobile devices, constituted by 4.4 million smartphones and 440,000 tablets during the three months.
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.”
The acquisition will increase competition by strengthening Google’s patent portfolio against other manufacturers and platforms such as Apple‘s iOS and Microsoft Windows Phone. Android has been a target of anti-competitive attacks from Microsoft and Apple. Motorola currently holds some 17,000 patents, although this has not deterred
The acquisition also directly transforms Google into a telecommunications hardware manufacturer, a move that Google has traditionally avoided. Similarly, Microsoft signed a strategic alliance with struggling Finnish phone hardware giant Nokia six months ago to spearhead the Windows Phone platform.
Andy Rubin, senior vice president of mobile at Google, said: “We expect that this combination will enable us to break new ground for the Android ecosystem.
The Google-Motorola Mobility deal is subject to US regulatory approval and the takeover is expected to be completed in late 2011 or early 2012.
Motorola Mobility shares soared 60% to $39.20 – just below Google’s offer price – in early trading on the New York Stock Exchange.
Source: Google Blog, Google Investor Relations
[spoiler title=”Show Press Release”]
Google to Acquire Motorola Mobility
Combination will Supercharge Android, Enhance Competition, and Offer Wonderful User Experiences
MOUNTAIN VIEW, Calif. & LIBERTYVILLE, Ill.–(BUSINESS WIRE)–Google Inc. (NASDAQ: GOOG) and Motorola Mobility Holdings, Inc. (NYSE: MMI) today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% 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 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.”
The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.
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.”
Andy Rubin, Senior Vice President of Mobile at Google, said, “We expect that this combination will enable us to break new ground for the Android ecosystem. However, 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.”
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.
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