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Google Buys Motorola Mobility – Pays $12.5 Billion, Gains Huge Patent Portfolio

Google Buys Motorola Mobility – Pays $12.5 Billion, Gains Huge Patent Portfolio

Google has announced that it is buying Motorola Mobility – the handset division of the former Motorola giant – for around US$12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares last Friday.­

The transaction was unanimously approved by the boards of directors of both companies.

Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

In addition to the handset manufacturer itself, Google gains a treasure trove of patents that will substantially boost its arsenal in the escalating tit-for-tat patent wars affecting the handset industry. Motorola Mobility owns over 17,000 patents with a further 7,500 pending approval.

Carl Ichan, who had been pressuring Motorola Mobility to sell its patent portfolio in an auction stated that “This is a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets.  In the past three years we have fought long and hard to separate Motorola Mobility from Motorola Solutions, as well as bring Sanjay Jha., as co-CEO.”

Carl Ichan’s investment vehicle owned at the last check, just under 11.4% of Motorola Mobility.

Google’s CEO, Larry Page wrote on his blog that “our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”

He added, “I look forward to welcoming Motorolans to our family of Googlers.”

The transaction 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.

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