GOOGLE HAS agreed to buy the mobile device division of Motorola for $12.5 billion, in a deal that gives it access to valuable mobile patents to defend itself against legal challenges from competitors.
Under the agreement, which has been unanimously approved by both boards, Motorola shareholders will get $40 a share in cash, a 63 per cent premium over the closing price on Friday.
Co-founder and chief executive Larry Page told analysts and press that the deal offered “tremendous opportunity” and would allow Google to “supercharge the whole Android eco-system”.
Most important, he added, was the protection it gave Android, Google’s operating system for mobile phones. The deal gives Google more than 17,000 patents, a valuable weapon in the war with rivals such as Apple.
“The combination of the two companies is going to create tremendous shareholder value, drive great user experiences and accelerate innovation,” Mr Page said.
“Motorola also has a strong patent portfolio, which will help protect Android from anti-competitive threats from Microsoft, Apple and other companies.”
Android is currently used by 39 device manufacturers, including Samsung, LG, Sony Ericsson and HTC, on more than 150 million devices worldwide.
Motorola Mobility would stay a separate entity, Google said, and the Android platform would remain open to other manufacturers.
The firms have already given their backing to the deal publicly, welcoming Google’s commitment to defending Android and its partners.
Apple has already accused Samsung, HTC and Motorola of copying iPhone inventions and has filed patent-infringement complaints in the US, Europe, Asia and Australia.
Last week the iPhone maker secured an injunction temporarily banning the sale of Samsung’s Galaxy Tab devices in Europe.
“This is the next step in building their position in the mobile world so they can distribute Google products and services through mobile phones and tablets,” said Clayton Moran, an analyst at Benchmark Co in Florida.
“They want a success with the Android platform and this will enhance their position in the mobile marketplace, as well as defend their position through the patent portfolio.”
The deal has yet to be approved by regulators in the US and Europe, but sources claimed that Google has agreed to pay Motorola $2.5 billion if the deal falls through.
According to the latest figures from Gartner, Android was the best-selling smartphone operating system in the second quarter of this year, with 43.3 per cent of the market compared to Apple’s 18.2 per cent. The Android charge was led by Samsung and HTC.
The deal also marks an end as an independent company for Motorola Mobility, which helped pioneer mobile phones and introduced its first consumer handset in the early 1980s.
Motorola Solutions will continue to provide communications products to large businesses and governments. – (Additional reporting: Bloomberg)
