New York - Google said it will buy phone hardware maker
Motorola Mobility Holdings for $12.5bn in cash to bolster the adoption of its
Android mobile software.
In its biggest deal to date, Google said it would pay $40
per share, a 63% premium to Motorola Mobility's Friday closing price on the New
York Stock Exchange.
"What it says is that Google wants to provide a total
experience that's hardware and software (like Apple)," said BGC Partners
analyst Colin Gillis.
Shares of Motorola Mobility, which focuses on smartphone and
TV set-top boxes, jumped 59% in premarket trade on Monday.
Google, maker of the Android mobile phone operating system
software, has been forging ahead in the smartphone market but has been hampered
by a lack of intellectual property in wireless telephony.
Earlier this month, fresh from losing a bid to buy thousands
of patents from bankrupt Nortel, Google chief legal officer David Drummond
blasted Microsoft, Apple, Oracle and "other companies," accusing them
of colluding to hamper the increasingly popular Android software by buying up
patents.
The Motorola Mobility deal may represent a victory for activist investor Carl Icahn, Motorola's biggest shareholder.
He has urged Motorola to consider splitting off its patent
portfolio to cash in on surging interest in wireless technology. As of July,
Icahn held an 11.36% stake in the company.
Google said the deal will close by the end of 2011 or early
in 2012, and that it will run Motorola Mobility as a separate business.
Lazard advised Google on the deal, while Motorola used
Centerview Partners and Frank Quattrone's Qatalyst Partners, sources told
Reuters.