Tuesday, August 16, 2011

Google to acquire Motorola Mobility for $12.5 billion

Yesterday earlier, Google announced that they are acquiring Motorola Mobility, the handset maker's mobile phone division for a sum of $12.5 billion. Google is now going directly into the hardware business in a very serious fashion, and into direct competition with licensees of its Android operating system. But Google also said it wants to acquire Motorola Mobility to defend against patent lawsuits levied by its competitors.

Google will pay $40 per share in cash – a premium of 63% over the stock's trading price yesterday morning. As of yesterday morning, Motorola Mobility's stock was trading at $38.21 a share on the New York Stock Exchange.
As usual, the acquisition is subject to the SEC and other regulatory approval agencies, which may not all be plain sailing, but Google hopes to wrap up the deal by some time in late March or early April 2012. But this latest acquisition dwarfs Google's previous and largest acquisition so far-- DoubleClick which was acquired for a fraction of the sum of money Google is shelling out today to acquire Motorola Mobility.

The search engine giant recently lost out in a patent auction for networking IP (intellectual property), one it didn't appear to take seriously. Perhaps this explains why it was behaving so rapidly with Motorola. Or perhaps Google realized what a serious issue it is.

After recently losing the Nortel IP auction, Google went out and acquired $1 billion worth of IBM patents just a few days later. We shall find out which ones they are, hopefully sooner rather than later.

As Android has grown to become the world's most used smartphone operating system, Google has faced an increasing number of patent lawsuits, most recently from Microsoft and Apple. "We've been saying for some time that we intend to protect the Android ecosystem," said David Drummond, chief counsel for Google.

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