Google to buy Motorola for €8.7bn

GOOGLE stepped up its assault on the smartphone and tablet computer market yesterday with the €8.7 billion acquisition of handset maker Motorola.

The search engine group is to pay $12.5bn forMotorola Mobility in a deal which gives it direct control over one of the largest manufacturers of mobile phones running Android, Google’s own operating system. The price, a 63% premium to the value of MotorolaMobility at the end of last week, makes the deal Google’s largest. It was hailed by chief executive Larry Page as a “natural fit”. Motorola Mobility is already a partner of Google, but will remain as a separate business and licensee of Android, which will also remain an open platform.

Shares in MotorolaMobility soared on news of the deal, which comes just eight months after the former Motorola split into two companies — Mobility, the handset company, and Solutions, which supplies wireless services, and which is not part of yesterday’s deal.

Analysts said theacquisition marks a changed emphasis for Google, as the battle with Apple and Asian rivals intensifies in the smartphone and tablet markets.

Predictions are for the tablet computer market to grow more than 10-fold by 2015, with tablets running on Android tipped to match or even overtake Apple’s iPad.

Patents are increasingly becoming a key weapon. Google recently lost a bidding battle over thousands of wireless patents owned by Nortel Networks to a consortium of Microsoft, Apple and Blackberry owner Research In Motion. Motorola Mobility has more than 17,000 phone technology patents.