Google buys Motorola Mobility for $12.5B

update Search giant unveils move to buy phonemaker for US$40 per share, or US$12.5 billion in total, allowing Google to "supercharge" Android ecosystem for benefit of consumers, partners and developers, says CEO Larry Page.

update Google has announced plans to buy over phonemaker Motorola Mobility for US$12.5 billion amid patent lawsuits targeting its mobile operating system, Android. Google CEO Larry Page says the acquisition will allow the Internet giant to "supercharge" the entire Android ecosystem and better protect the company from anti-competitive threats.

According to a press release issued by both parties on Monday, Google has entered a definitive agreement to purchase Motorola Mobility for US$40 per share in cash, or a total of US$12.5 billion. The transaction was unanimously approved by the boards of directors of both companies, with the deal expected to be ratified by end-2011 or early 2012.

In a separate blog post, Page wrote that Motorola's "total commitment" to Android in mobile devices was one of many reasons the two companies made a "natural fit".

"Together, we will create amazing user experiences that [will] supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere," he said.

Addressing the threat from both Microsoft and Apple in initiating anti-competitive patent attacks on Android, Page said the acquisition will boost competition "by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies".

As for other phone manufacturers that have invested heavily in Android, Andy Rubin, Google's senior vice president of mobile, said the company's vision for Android to be an open platform and a vibrant open source community remains "unchanged".

"We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices," Rubin said in the press statement.

In an statement following news about the acquisition, Ovum analyst Tim Renowden noted that Google's message about "supercharging" the Android ecosystem pointed to its plans to work particularly closely with the Motorola team.

"This is a delicate balancing act for Google; any hint of favoritism or signs that Motorola is getting an unfair advantage and other key Android vendors will not be pleased," Renowden said. "We may see Samsung, HTC, LG, Sony Ericsson and others reinvest in alternative mobile platforms, most likely Microsoft's Windows Phone ecosystem, to keep Google honest."

He acknowledged that the buyout would significantly strengthen Google's patent portfolio, which he said was "an important move in light of ongoing patent litigation across the mobile industry, particularly litigation aimed at Android and its vendor partners".