Today, Search giant Google has agreed to buy phone company Motorola Mobility for $ 12.5 billion in cash, making this its biggest acquisition yet, if approved. The deal will boost Android, Google’s operating system for mobile devices. The deal was announced Monday morning by two companies.
The firms have entered into a definitive agreement under which Google will buy Motorola Mobility for US$40 a share, a 63 percent premium over the closing price of Motorola Mobility shares on Friday, they said in a statement indicating their boards of directors had -unanimously approved the deal. Under the agreement, Motorola Mobility will remain an Android licensee and Google will run the unit as a separate business.
Apple, which makes its own wireless software and hardware, briefly became the most valuable company in the world last week, helped by demand for the iPhone and the iPad tablet computer.
Motorola Mobility, based in Libertyville, Illinois, rose $13.92, or 57 percent, to $38.40 at 10:23 a.m. on the New York Stock Exchange. Google, based in Mountain View, California, fell $5.77, or 1 percent, to $558 on the Nasdaq Stock Market. InterDigital Inc., owner of mobile-phone patents that’s considering a sale, fell $14.87, or 20 percent, to $60.85.
Google is paying a premium of 73 percent compared with Motorola Mobility’s 20-day trading average price before today. The average premium of more than 360 deals in the wireless- equipment industry on that basis was 32 percent in the past five years, according to Bloomberg data.
Android was the best-selling smartphone operating system in the second quarter as sales rose more than fourfold to 43.3 percent of the market, led by Samsung and HTC, according to research firm Gartner Inc. Apple had an 18.2 percent share, the researcher said. While Motorola Mobility’s Droid phones have found a following in the U.S., globally the company ranks outside the top players in the smartphone market.
The deal 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.