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Google purchases Motorola Mobility for $12.5bn

Google purchases Motorola Mobility for $12.5bn
Google purchases Motorola Mobility for $12.5bn
Google announces purchase of company for $40 per share

In a surprise move today, Google announced a definitive agreement in which Motorola Mobility has been acquired for a total of $12.5 billion. The shocking move comes around 2 weeks after Motorola unveiled their Q2 earnings, which revealed a net loss of $56 million.

Announced via Google’s official blog, Motorola stocks were bought for $40 a sharea premium of 63% compared to Friday’s closing price. The agreement appears to have been approved unanimously by the boards of directors of both companies; however, approval in the EU, US and by Motorola stockholders is still required. The transaction is expected to close by the end of this year or early 2012 at latest.

In commenting on the subject, Sanjay Jha, CEO of Motorola Mobility, had the following to say:

"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.”

Motorola is one of the few companies that has adopted Android as the sole operating system across all its smartphones and tablets, and definitely has been rewarded justly. On the other hand, this doesn’t mean the end of Android’s open-source era, with Google CEO, Larry Page stating:

“This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.”

In addition to the obvious appeal of acquiring a hardware giant in Motorola, one of the reasons behind this purchase appears to be an effort by Google to protect Android from anti-competitive threats by Apple and other companies. And while the company is expecting that the purchase will “supercharge” Android, all we’ve got to say is- why didn’t we purchase Motorola stock any sooner? 

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Author: Omar Qudsi, 2011-08-15 (Update: 2012-05-26)