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Google said today it has agreed to buy Motorola Mobility for $12.5 billion, giving the search giant valuable intellectual property and getting it directly into the handset business.
Google will pay $40 a share in cash for Motorola, a 63 percent premium over the company's closing stock price on Friday. The acquisition will "mildly" add to earnings once the deal closes by year's end or early 2012, Google said.
The deal simultaneously lends stability to and shakes up the Android world. With Motorola, Google gets a treasure trove of patents to defend itself and its partners against a rising tide of legal opposition. Over the past few months, major technology players such as Apple and Oracle have sued either Google or its partners in an attempt to slow down their competitors and extract licensing fees.
"We believe we'll be in a very good position to protect the Android ecosystem for all of our partners," David Drummond, Google's chief legal officer, said today during a conference call. He declined to provide specifics on the company's future legal strategy.
At the same time, the deal puts Google in the awkward position of competing against many of its partners. For the first time, Google will have a direct hand in the mobile business that it fostered from a distance. While Google creates the Android operating system critical to running millions of smartphones and tablets, it has yet to get into the design and manufacturing business itself, aside from a few experimental models with handset partners such as HTC and Samsung.
Google will pay $40 a share in cash for Motorola, a 63 percent premium over the company's closing stock price on Friday. The acquisition will "mildly" add to earnings once the deal closes by year's end or early 2012, Google said.
The deal simultaneously lends stability to and shakes up the Android world. With Motorola, Google gets a treasure trove of patents to defend itself and its partners against a rising tide of legal opposition. Over the past few months, major technology players such as Apple and Oracle have sued either Google or its partners in an attempt to slow down their competitors and extract licensing fees.
"We believe we'll be in a very good position to protect the Android ecosystem for all of our partners," David Drummond, Google's chief legal officer, said today during a conference call. He declined to provide specifics on the company's future legal strategy.
At the same time, the deal puts Google in the awkward position of competing against many of its partners. For the first time, Google will have a direct hand in the mobile business that it fostered from a distance. While Google creates the Android operating system critical to running millions of smartphones and tablets, it has yet to get into the design and manufacturing business itself, aside from a few experimental models with handset partners such as HTC and Samsung.
