Explosive news this morning, kids. Google has agreed to purchase Motorola's recently spun-off Mobility arm for a fee of $12.5 billion. Mobility was the name given to Motorola's consumer devices unit, which includes the Droid smartphone line and the nascent Xoom tablet range, both of which rely on Google's Android software for their operating system. Motorola was alone among the major smartphone vendors in not joining Microsoft's Windows Phone reboot and its loyalty to the Android ecosystem has now been rewarded with Google buying it whole.

For the Mountain View team, this move signals a bold and definitive step into the hardware business. Google had already flirted with the idea through the introduction of the Nexus One and Nexus S smartphones -- manufactured by HTC and Samsung, respectively -- which served as role models for what the ideal Android experience should be. The goal for the company isn't changing much now that it's taken over Motorola Mobility, with CEO Larry Page asserting that "together, we will create amazing user experiences that supercharge the entire Android ecosystem." We don't know where Motorola's skin customizations -- formerly known as Motoblur -- fit into all of this (hopefully they don't), but for now we're assured that Android as a whole will continue to operate as it has done and will remain open. Google plans to run Moto Mobility as a separate business that simply licenses the software.

Motorola's not inconsiderable cachet of intellectual property has also been cited as an incentive for pulling the trigger on this deal. Larry Page describes Moto's patent portfolio as an asset that will strengthen Google's position with respect to "anti-competitive threats from Microsoft, Apple and other companies."

You'll find the full press release after the break and a webcast has been scheduled for 8:30AM ET this morning to discuss the acquisition and what it means for the future of Android.

Update: We're on the call listening to Page and Jha right now — join us after the break for live updates!

Source: Google

Google to Acquire Motorola Mobility

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

MOUNTAIN VIEW, Calif. & LIBERTYVILLE, Ill., Aug 15, 2011 (BUSINESS WIRE) -- Google Inc. GOOG -3.32% and Motorola Mobility Holdings, Inc. MMI +60.32% 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 http://investor.shareholder.com/media/eventdetail.cfm?eventid=101369&CompanyID=ABEA-3VZHGF&e=1&mediaKey=A21887C59EBAAC12F1BCF4D43C080953 . The webcast version of the conference call will be available through the same link following the conference call.