Google has just announced that it has entered into an agreement to acquire Motorola Mobility for $12.5 billion. The search giant will be paying $40 per share, a premium of 63% from the closing price of Motorola's shares from last Friday. The actual acquisition is expected to take place in late 2011 or early 2012 pending regulatory approvals.

A partnership between the developer of the Android platform and a top 3 Android device manufacturer is likely to light a fire beneath the likes of Samsung, HTC, LG, and other Android partners. However, to quell their fears Google's press release clarifies that Motorola "will remain a licensee of Android and Android will remain open... [and] Google will run Motorola as a separate business." Furthermore, Andy Rubin, SVP of Mobile at Google, reiterates that while the acquisition will "break new ground for the Android ecosystem... [Google's] vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community". Google has been very careful in its statement not to isolate its partners at a time when patent litigation could potentially destabilize Android's growth.

In fact it appears that part of the motivation behind this acquisition is to obtain Motorola's considerable mobile patent portfolio which stretches back over 80 years. Larry Page, CEO of Google, states that the "acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable [Google] to better protect Android from anti-competitive threats from Microsoft, Apple and other companies".

Finally, it is unclear at this point whether Google will use Motorola's manufacturing expertise to create the next Google-branded Nexus device or whether it will simply allow Motorola to continue making Droids. At the very least, hopefully this is last we will see of the abomination that is MotoBlur!

If you are interested in hearing more about Google's acquisition, tune in to the live webcast (registration required) of their conference call with financial analysts.

Update: Google provided brief commentary from its Android partners, quoted below.

“We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem.”

– J.K. Shin
President, Samsung, Mobile Communications Division

“I welcome Google‘s commitment to defending Android and its partners.”

– Bert Nordberg
President & CEO, Sony Ericsson

“We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.”

– Peter Chou
CEO, HTC Corp.

“We welcome Google‘s commitment to defending Android and its partners.”

– Jong-Seok Park, Ph.D
President & CEO, LG Electronics Mobile Communications Company

Official press release below:

Google to Acquire Motorola Mobility

Combination will Supercharge Android, Enhance Competition, and Offer Wonderful User Experiences

MOUNTAIN VIEW, CA and LIBERTYVILLE, IL – AUGUST 15, 2011 – Google Inc. (NASDAQ: GOOG) and Motorola Mobility Holdings, Inc. (NYSE: MMI) today announced that they have entered into a definitive agreement under which Google will acquire Motorola Mobility for $40.00 per share in cash, or a total of about $12.5 billion, a premium of 63% to the closing price of Motorola Mobility shares on Friday, 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 supercharge 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.”

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.”

Andy Rubin, Senior Vice President of Mobile at Google, said, “We expect that this combination will enable us to break new ground for the Android ecosystem. However, our vision for Android is unchanged and Google remains firmly committed to Android as an open platform and a vibrant open source community. We will continue to work with all of our valued Android partners to develop and distribute innovative Android-powered devices.”

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.

Webcast Information

Google and Motorola Mobility will hold a conference call with financial analysts to discuss this announcement today at 8:30am ET. The toll-free dial-in number for the call is 877-616-4476 (conference ID: 92149124). The call will also be webcast live at The webcast version of the conference call will be available through the same link following the conference call.

Source: Press Release and The Official Google Blog