Google on Monday announced it has entered a definitive agreement to acquire mobile device maker Motorola Mobility for $12.5 billion in cash.
The move, approved by the boards at both companies, will expand Google’s Android mobile business, creating a larger ecosystem for developers of games and apps. The search engine giant said that the acquisition will "enhance competition in mobile computing."
Not only will the acquisition benefit developers, but also Motorola Mobility stockholders – the $40 price per share that Google paid to acquire the company is a 63 percent premium over the closing price of Motorola Mobility shares on Friday.
Prior to the acquisition, Motorola Mobility was already an Android dedicated partner, with Motorola handsets and tablets using Android as an OS.
Motorola Mobility will remain an Android licensee, and Google will run it as a separate business. Google emphasized that the Android platform will remain open.
Google SVP of mobile Andy Rubin said in a statement, "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," he added. "We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices."
Motorola Mobility CEO Sanjay Jha added, "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 slated to close by the end of 2011 or early 2012, and is subject to closing conditions including the approval of Motorola Mobility stockholders, according to Google.
In July this year, Google announced that over 130 million Android devices had been activated, while more than 550,000 are activated every day.