Google Buying Moto Mobility for $12.5B

Google (Nasdaq: GOOG) claims it will "supercharge" the Android ecosystem and boost mobile competition by acquiring Motorola Mobility LLC for US$12.5 billion. (See Google Acquires Moto Mobility for $12.5B.)

Google, in a surprise deal announced Monday morning, said it will run Moto Mobility as a separate business and that the unit will remain a licensee of Android. Google also pledged that the Android OS "will remain open."

"We expect that this combination will enable us to break new ground for the Android ecosystem," Andy Rubin, SVP of Mobile at Google, said in a statement. "However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community."

Under the terms of the deal, Google will pay $40 per share in cash, a 63 percent premium over the closing price of Motorola Mobility shares on Friday, Aug. 12. The boards of both companies have unanimously approved the deal. Google and Motorola Mobility expect to close the deal by the end of 2011 or in early 2012.

Why this matters
The purchase ties Google to one of Android's staunchest supporters at a time when both are facing off against the strength of Apple Inc. (Nasdaq: AAPL) and its iOS platform for hot-selling smartphones and tablets. It also gives the Android maker access to Moto's patent portfolio, which it could potentially share with other Android licensees.

The deal also gets Google into the business of selling set-tops and video security, which complements what it acquired from Widevine Technologies Inc. in late 2010. A move into the set-top box could give Android a straighter path to the video service provider market. (See Google Acquiring Widevine.)

For more
Read more recent news from the Google and Moto Mobility camps:

— Jeff Baumgartner, Site Editor, Light Reading Cable