Google to acquire Motorola Mobility for US$12.5 billion cash

Google Inc. and Motorola Mobility Holdings, Inc. today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for US$40.00 per share in cash, or a total of about US$12.5 billion, a premium of 63 per cent to the closing price of Motorola Mobility shares on August 12, 2011. The transaction was unanimously approved by the boards of directors of both companies.

The acquisition of Motorola Mobility, a dedicated Android partner, will enable Google to boost the Android ecosystem and will enhance competition in mobile computing. Motorola Mobility will remain a licensee of Android and Android will remain open. Google will run Motorola Mobility as a separate business.

Larry Page, CEO of Google, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”

Motorola Mobility senior management at the company’s listing on the NYSE on January 4, 2011

Sanjay Jha, CEO of Motorola Mobility, said, “This transaction offers significant value for Motorola Mobility’s stockholders and provides compelling new opportunities for our employees, customers, and partners around the world. 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 subject to customary closing conditions, including the receipt of regulatory approvals in the US, the European Union and other jurisdictions, and the approval of Motorola Mobility’s stockholders. The transaction is expected to close by the end of 2011 or early 2012.

Earlier this year Motorola Mobility announced first-quarter revenues rose by 22 per cent to US$3 billion, and net loss shrank to US$81 million from US$212 million a year ago.

In the quarter, the company generated US$107 million in operating cash flow, its seventh consecutive quarter of positive cash generation.

Mobile Devices net revenues in the first quarter were US$2.1 billion, up 30 per cent compared with the year-ago quarter. The GAAP operating loss was US$89 million compared to an operating loss of US$192 million in the year-ago quarter.

Motorola Mobility shipped a total of 9.3 million mobile devices, including 4.1 million smartphones and more than 250,000 Motorola XOOM tablets in the quarter to end-March. In comparison, Motorola Mobility shipped 8.5 million mobile devices, including 2.3 million smartphones in Q110.