It was one of the biggest deal ever, when Google Inc announced it’s desire to buy Motorola Mobility Holding Inc. Google has set it’s sight on it’s rival Apple Inc after the deal was set at US $ 12.5 billion CASH acquisition.
Earlier last week, Google had a failed attempt in trying to buy patents. Patents were to be bought from Nortel, which is now bankrupt. Google also tried to fight a war with companies like Apple and Microsoft Corp., on the grounds of intellectual property library in wireless telephony.
Larry Page who is the CEO of Google stressed on the fact that Android is and will always remain an open source to all. According to Nomura Securities global specialist Richard Windsor, “The danger is that other handset makers feel disenfranchised, … Motorola is the weaker player. This could actually collapse the entire community.”
There was a bit of surprise in the Wall Street because of this, and shares of Motorola Mobility jumped by 59 percent and Nokia on the other hand jumped by 10 percent as it was assumed by many that Nokia may possibly be the next target to be acquired.
Android is the world leader in the market today due to its huge support of various phone makers including rival companies such as Samsung Electronics Co. At present, 43.4 percent of all smart phone market in the world is held by Android. Nokia is second with 22 percent and Apple has third place to it’s name with 18 percent market share.
The deal value values Motorola Mobility at US $40 per share in cash which is having about 63% premium over it’s closing value on Friday on New York Stock Exchange.
According to Colin Gillis, who is an analyst at BGC Partners, “It’s a deal that will take time to pay off, but they have a lot of cash and they want to chase after profit”. This was said in the context of Android which has not been so much profitable as expected till date.
Google plans to run Motorola Mobility as a separate identity. The deal is expected to close by end of 2011 or by early 2012. The deal also requires regulatory approvals in countries such as United States and European countries.
Icahn, in one of the statements, said that this deal is “a great outcome for all shareholders of Motorola Mobility.”