By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Google Inc. reached into its deep cash stash Monday and said it would pay $12.5 billion in cash to acquire Motorola Mobility Holdings Inc. in a bid to secure a slate of wireless patents and increase the market position of the Android operating system.
Motorola's (MMI) shares climbed by $13.90, or almost 57%, to $38.36 after the acquisition was announced. The selling price values Motorola at $40 a share -- a 63% premium over the stock's closing price last Friday.
The deal is also the largest acquisition in Google's history, quadrupling the $3.1 billion Google paid for DoubleClick in 2007. The acquisition comes just eight months after Motorola split into two separate companies: Motorola Mobility, which is responsible for smartphones and consumer products, and Motorola Solutions Inc. (MSI), which took over the old Motorola's business and networking product lines.
Motorola Solutions shares rose about 1% in afternoon trading action.
However, Google (GOOG) gave up $14.65 a share, or 2.6%, to slip to $549.23 after the deal's announcement.
Nokia Corp. (NOK) rose 58 cents a share, or 11%, to $5.95 following reports that the handset maker could benefit from Google's acquisition of Motorola Mobility, as that deal could help increase the value of Nokia's own wireless-technology patents.
Among other tech stocks, IBM Corp. (IBM) was up $3.57, or 2%, to $171.71 after Goldman Sachs analyst Bill Shope raised his rating on the tech giant to buy from neutral, and lifted his price target to $195 a share from $170. Shope cited IBM's diversified business portfolio among the reasons for his upgrade.
Shope also cut his rating on printer company Lexmark International Inc. (LXK) to sell from neutral, saying that the company's supplies revenue is likely to come under industry pressure. Lexmark's shares fell 23 cents to $31.46.
Shope wasn't the only Goldman analyst busy cutting and raising stock ratings on Monday.
Analyst Simona Jankowski cut Juniper Networks Inc. (JNPR), taking down the networking equipment maker to neutral from buy, and also lowered Brocade Communications Systems Inc. (BRCD) sell from neutral. Additionally, Jankowski lifted F5 Networks Inc. (FFIV) to neutral from sell.
Dell Inc. (DELL) was up by 43 cents, or almost 3%, at $15.31, a day ahead of the PC company's quarterly financial results.
The Nasdaq Composite Index (RIXF) rose 32 points to 2,540, while the Morgan Stanley High Tech 35 Index (MSH) and the Philadelphia Semiconductor Index (SOX) both rose 1.3%.