Google Inc, the biggest maker of smartphone software, agreed to buy Motorola Mobility Holdings Inc for $12.5 billion in its largest acquisition, gaining mobile patents and expanding in the hardware business.
Motorola shareholders will get $40 a share in cash, the companies said in a statement. That's 63 per cent more than Motorola Mobility's closing price on the New York Stock Exchange on Aug. 12. Both boards have approved the takeover.
Larry Page, the Google co-founder who took over as chief executive officer in April, is pushing the Web company into smartphones to take on Apple Inc's iPhone and gain more clout for its Android software in the wireless business. Motorola Mobility, under pressure from activist investor Carl Icahn to shift strategy, gives Google more than 17,000 patents it can leverage in negotiations with competitors such as Apple.
"This is the next step in building their position in the mobile world so they can distribute Google products and services through mobile phones and tablets," said Clayton Moran, an analyst at Benchmark Co in Boca Raton, Florida, who recommends Google shares. "They want a success with the Android platform, and this will enhance their position in the mobile marketplace, as well as defend their position through the patent portfolio."
Apple, which makes its own wireless software and hardware, briefly became the most valuable company in the world last week, buoyed by demand for the iPhone and the iPad tablet computer.
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