Google to Buy Motorola Mobility for $12.5 Billion!

Google Inc. (GOOG), maker of the Android mobile-phone software, agreed to buy smartphone maker Motorola Mobility Holdings Inc. for $12.5 billion in its biggest deal, gaining mobile patents and expanding in the hardware business.

Motorola shareholders will get $40 a share in cash, the companies said in a statement today. That’s 63 percent more than Motorola Mobility’s closing price on the New York Stock Exchange on Aug. 12. Both boards have approved the takeover.

Larry Page, Google’s co-founder who took over as chief executive officer in April, is transforming Google into a smartphone maker to take on Apple Inc. (AAPL)’s iPhone and gain more clout in the wireless business. Motorola Mobility, under pressure to seek strategic changes by activist investor Carl Icahn, gives Google more than 17,000 patents the company can leverage in negotiations with competitors such as Apple.

“This is the next step in building their position in the mobile world so they can distribute Google products and services through mobile phones and tablets,” said Clayton Moran, an analyst at Benchmark Co. in Boca Raton, Florida, who recommends Google shares. “They want a success with the Android platform and this will enhance their position in the mobile marketplace, as well as defend their position through the patent portfolio.”