Google, Inc announced that it is purchasing Motorola Mobility Holdings Inc. for $12.5 billion in cash. Motorola Mobility was separated from the main Motorola Company earlier this year. Google will pay $40.00 per share which equals a 63 percent premium to Motorola’s closing price on Friday. In premarket trading Motorola’s shares rose by 60% from $14.72 to $39.19.
The natural business connection between these companies is the telephone software operating system called “Android” that Google developed together with the Open Handset Alliance. A couple of years ago, Motorola Mobility committed itself to use only Android software.
Google’s Android is used by smartphones competing with BlackBerrys, iPhones, and Windows-based mobile devices. Motorola Mobility has been facing stiff competition from Apple Inc. and smartphone companies from Asia. Therefore, joining with Google will strengthen Motorola Mobility.
One of the important benefits to Google is that it will obtain access to Motorola Mobility’s 17,000 telephone patents. Google has been running into some technology patent problems which will be solved with acquiring these patents.
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