The acquisition will put Google and Apple head-to-head in the battle for dominance in the fast-growing smartphone market, as the companies will control both the hardware and software of their products.
Google will pay $40 per share for Motorola Mobility, a 63 per cent premium to the company’s closing share price on Friday. In pre-market New York trading, Motorola shares were up 60 per cent at $38.96. Pending approval from shareholders and regulatory authorities in the US, Europe and elsewhere, the deal is expected to close by the end of 2011 or early 2012. Google’s press release...
Motorola Mobility was demerged from Motorola earlier this year after the handset maker was left behind in the touchscreen smartphone revolution ushered in by Apple’s iPhone in 2007.
The tie-up between Google and Motorola Mobility gives a fillip to technology mergers and acquisitions in what has been a subdued year. The strength of the market, until recently, for initial public offerings has garnered most attention in Silicon Valley so far in 2011, with dealmaking taking a back seat to high profile floats, such as Groupon and LinkedIn.
In results last month, Motorola Mobility said that strong sales of Android-based devices in Latin America and China boosted second-quarter revenues by 40 per cent but it swung to a $85m operating loss in the face of stronger competition from HTC and Samsung.
The handset business ran into severe difficulties about five years ago after missing the trend towards touchscreen smartphones, and the use of third generation wireless technology, which enables web surfing on mobiles.
The business ran up large losses, but the turnround plan led by Sanjay Jha, chief executive of Motorola Mobility since 2008, has made significant strides. The company reported an operating profit of $76m in 2010, compared with a loss of $1.2bn in 2009.
Google’s move on Motorola Mobility emphasises how the rash of spin-offs and separations seen in the past year will create pure-play targets for would-be buyers. However, those seeking to snap up the focused businesses created by separations must tread a fine balance in the US, where spins are popular because of their tax-free status.
Nokia decided to use Microsoft’s smartphone operating system, in an announcement made in February, after concluding Android-based handset makers faced commoditisation. For the latest updates PRESS CTR + D or visit Stock Market news Today
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