Google to buy Motorola Mobility

Google is buying Motorola Mobility their (ex) handset division for $12.5bn in cash, however Mobility also manufactures set-top boxes (and a lot of them) which fits in nicely with Google's TV plans.

The deal should complete in 2012 but there will be a lot of US and EU competition regulations to wade through, so the deal might actually a while to get final approval. Shareholders should be happy as Google paid $40 per share which was a 63% premium (on Friday's closing price).

Google will gain access to a large patent portfolio which may help them against the threat from other IP holders such as Microsoft and Apple, though it's unlikely to do much for the fight against Oracle and their Java legal issues.

Motorola are one of the major Android licensees and Google expect to keep them at arms length in terms of Android development. It's likely that Google will sell all or part of the division in the future - so a cash deal means it's easy to chop off the divisions without their being any legacy tie-ins to Google.

Google's Nexus One was manufactured by HTC, the Nexus S by Samsung, this deal probably means the next Nexus will be a Motorola unit.