Google Buys Motorola Mobility For $12.5B, Says “Android Will Stay Open”

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Google just announced that it is acquiring Motorola Mobility. The search and online advertising company is buying the company for approximately $12.5 billion (or $40 per share), in cash. The price represents a premium of 63 percent to the closing price of Motorola Mobility shares last Friday. Google had about $39 billion in cash at last count.

Here’s the other important part of the PR (the why, and what happens to Android now):

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

In a blog post, Google co-founder and CEO Larry Page writes that Google has acquired Motorola not only because of its strength in Android smartphones and devices, but also for being a “market leader in the home devices and video solutions business.”

It’s also a move to build up the company’s patent portfolio, he adds, as it will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies”.

According to Motorola Mobility’s website, the company holds approximately 14,600 granted patents and 6,700 pending patent applications, worldwide, as of January 2011. Update: You can find updated numbers on this – based on the conference call – in our follow-up post.

Motorola Mobility is what used to be the Mobile Devices division of Motorola until January 2011.

A few years ago, Motorola bet its future in the mobile devices market by going full Android, launching the “Droid” – initially on the Verizon network – on November 6, 2009. The “Droid X” and “Droid 2″ followed in 2010.

Big question now is: how will HTC, LG, Samsung, Sony Ericsson, Acer, Lenovo and other Android device makers respond to this news? Update: Google points out some of them already have.

We’re jumping on the conference call soon, and doing thorough analysis later. For now, whoa.

Full press release:

Google to Acquire Motorola Mobility

Combination will Supercharge Android, Enhance Competition, and Offer Wonderful User Experiences

MOUNTAIN VIEW, Calif. & LIBERTYVILLE, Ill.–(BUSINESS WIRE)–Google Inc. (NASDAQ: GOOG) and Motorola Mobility Holdings, Inc. (NYSE: MMI) today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. 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.”

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to supercharge the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. 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, “This transaction 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.”

Andy Rubin, Senior Vice President of Mobile at Google, said, “We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.”

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.