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Google to Acquire Motorola Mobility

In a surprise announcement coming early Monday morning, Internet search giant Google Inc. said it has agreed to a deal to acquire Motorola Mobility for $12.5 billion.  The Mountain View, California-based company said the deal, which would be its largest acquisition ever, will help it gain an even stronger foothold in the booming mobile market.  Google owns Android, the popular mobile phone operating system, which has been gaining in market share at the expense of Apple's iOS.

Additionally, the company said, the acquisition of Motorola Mobility will also help Google fight off patent lawsuits from its competitors.  Motorola Mobility has been a major player in the communications sector for more than 80 years, and is credited with the invention of the cellphone some 30 years ago, when it was still known simply as Motorola.  Earlier this year, Motorola split into two public companies: Mobility, which manufactures cellphones and related equipment, and Solutions, which makes public safety equipment like two-way radios for law enforcement agencies.

Motorola Mobility holds some 17,000 patents relating to consumer electronics, with another 7,500 pending regulatory approval.  As Android has risen to become the world's most widely used smartphone platform, Google has faced a growing number of lawsuits from companies like Microsoft, Research in Motion and Apple.  The company recently tried to acquire the patent portfolio of Nortel, but was outbid by a group including Apple and Microsoft.

According to Google officials, Motorola will continue to operate as a separate company after the deal closes, even continuing to license Android and pay Google for the OS's core applications.  The terms of the deal call for Google to pay $40 per share for Motorola Mobility, a premium of 63 percent over the stock's closing price on Friday.  The handset maker's shares were up about 56 percent two hours into Monday's trading session, while Google shares were down nearly 3 percent.