MOUNTAIN VIEW, Calif. – Google Inc. is buying cellphone maker Motorola Mobility Holdings Inc. for US$12.5 billion in cash. It’s by far Google’s biggest acquisition to date and a sign the online search leader is serious about expanding beyond its core Internet business.
Google said Monday that it would pay US$40 per share, a 63 per cent premium to Motorola’s closing price on Friday.
The California-based search engine giant and Chicago-area based smartphone maker said the blockbuster deal has been approved by the boards of both companies.
Motorola Mobility was separated from the rest of Motorola in January. The company has remade itself as a maker of smartphones based on Google’s Android software, but has struggled against Apple Inc. and Asian smartphone makers.
The transaction could signal a wave of consolidations in the smartphone industry as players try to hook up manufacturing and software applications providers to compete more aggressively with each other.
That could put Canadian technology giant Research in Motion Ltd. in play as a potential takeover target, especially since its shares are well below where they have traded in the past.
Shares in RIM were up 70 cents, or almost three per cent, to $24.99 in late morning trading on the Toronto Stock Exchange.
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On the New York Stock Exchange, Motorola Mobility Holdings Inc. shares were up $13.66, or 55.86 per cent, at US$38.13. On the NASDAQ, Google Inc. stock was down $16.36, or 2.9 per cent, at US$547.41. Apple Inc. shares were up up $4.12, or just over one per cent, at US$381.11 on the NASDAQ.
National Bank Financial analyst Kris Thompson said Google’s acquisition of Motorola Mobility may stabilize RIM’s share price in the short term.
Thompson said RIM’s stock price may have found its “near-term bottom.”
“We believe Google’s acquisition of MMI will set a floor-value for RIM’s shares around current levels,” Thompson wrote in a research note.
A potentially better than expected second financial quarter for the Waterloo, Ont., company and earlier than expected launches of updated BlackBerry smartphones could give the stock “some near-term support,” he said.
Thompson noted that Motorola Mobility has more than 17,000 issued patents and that Google intends to protect the Android eco-system from lawsuits, probably through the acquisition of more patents.
He said that the value of RIM’s patents may now be worth $10 billion and added that speculation on their value could also lift the share price in the short term.
Google CEO Larry Page said that the deal with Motorola would “supercharge the entire Android ecosystem.”
The deal gives Google direct control over the manufacturer of many of its Android smartphones.
“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies,” Page said in a release from Google headquarters in Mountain View, Calif.
“Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”
Sanjay Jha, CEO of Motorola Mobility, said, Monday’s blockbuster deal “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.”
The transaction is subject to customary regulatory and closing conditions and is expected to close by the end of 2011 or early 2012.
The acquisition dwarfs Google’s previous biggest deal, the 2008 purchase of DoubleClick for US$3.2 billion.
With files from The Associated Press
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