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UPDATED 08/15/11 9:37 a.m.
MOUNTAIN VIEW, Calif. (CBS) — Google has struck a deal to buy Libertyville-based Motorola Mobility Holdings for $12.5 billion in cash.
The deal is by far the biggest acquisition by Google, and a sign the online search leader is serious about expanding beyond its core Internet business and setting the agenda in the fast-growing mobile market.
LISTEN: WBBM Newsradio’s Regine Schlesinger reports
Google will pay $40 per share, a 63 percent premium to Motorola’s closing price on Friday.
Google’s Android operating system runs smartphones that compete with iPhones, BlackBerrys and Windows-based mobile devices. Motorola Mobility was separated from the rest of Motorola in January. The company has remade itself as a maker of smartphones based on Android, but has struggled against Apple Inc. and Asian smartphone makers.
“Motorola Mobility’s total commitment to Android has created a natural fit for our two companies,” Google CEO Larry Page said in a statement. “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers.”
CBS and CNET technology consultant Larry Maggid says the move is a huge step for Google.
“It puts Google on a level playing field with Apple, because Apple manufactures its own iPhones, and software for the iPhone. Now Google can do the same thing,” Maggid said.
The acquisition has the approval of both companies’ boards and is expected to close by the end of this year or early 2012. That may be overly ambitious, however, as the deal is likely to face regulatory scrutiny. It dwarfs Google’s previous biggest deal, the 2008 purchase of DoubleClick for $3.2 billion, which took a year to get approval.
Following the deal, Motorola Mobility agreed to keep its workforce of about 3,000 at the facility for at least the next 10 years.
State Rep. Ed Sullivan Jr. (R-Mundelein) told the Daily Herald previously the company is planning to invest $500 million locally. Sullivan said Motorola Mobility also will hire about 2,500 people for research and development.
The company had been considering moving the front office to Silicon Valley, or other high-profile tech centers out of state.
(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS Radio and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.)