Google to buy Motorola Mobility for $12.5 billion

August 15, 2011 (MOUNTAIN VIEW, Calif.) (WLS) -- Google is expanding into the mobile phone market, buying Motorola Mobility in a $12.5 billion deal.

The acquisition takes an already-existing partnership between the two companies to the next level.

Motorola could cash in on its large portfolio of phone technology patents and Google could become a serious contender in the increasingly competitive field of smartphones.

The long term effects of the deal are still not known. Motorola Mobility shares soared as high as 60 percent in early trading. The deal is the largest in online search leader Google's history.

The companies have been working together for several years, with Motorola throwing its weight behind Google's Android mobile operating system.

Monday morning's announcement was a surprise, but it was one that Motorola Mobility's CEO Sanjay Jha says is a win-win situation.

"Through this combination... we will be able to do even more to innovate and deliver outstanding mobility solutions across our mobile devices and home business," said Jha.

The acquisition's effects on Libertyville-based Motorola are still not known. Libertyville Mayor Terry Weppler is confident the company will remain a large presence in the village.

"It's not like Google doesn't have a presence in Illinois at this point in time," said Weppler. "They have a large office down in the city. It's one of their largest offices in the country"

Back in May, Governor Pat Quinn signed a statewide tax incentive to keep Motorola and its thousands of jobs in Illinois, a package totaling $100 million over ten years.

On Monday, Quinn said that both Motorola and Google are still investing in the state.

"I spoke to their chief legal officer this morning, who is in charge of governmental relations, and we really look forward to growing with Google and Motorola Mobility," said Quinn.

Experts say that Google wants the large portfolio of Motorola's patents to help it go up against other powerful companies in the technology industry.

Although Google says it will run Motorola as a separate company, it is still unknown whether the people behind the technology are part of the deal.

"If Google's only interested in the patents, what it means is the employment in Libertyville is going to dwindle fast, because they're not interested in the company as a phone maker," said John Pletz of Crain's Chicago Business.

The acquisition has the approval of both companies' boards and is expected to close by the end of 2011 or early 2012.

Congressman Robert Dold, whose district includes Libertyville, said Monday he is hearing that Motorola is making a commitment to stay in the city.

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local, karen jordan

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