In a statement Google said the acquisition will enhance its existing expertise and technology in mobile advertising, while also giving advertisers and publishers more choice.

Both companies have approved the transaction, which is subject to customary closing conditions.

It goes without saying that this a huge deal and is the biggest so far in a mobile ad sector that has already seen Microsoft buy Screentonic and AOL buy Third Screen Media.

AdMob says that after the deal closes it will work with Google to 'accelerate the pace of innovation in mobile'.

This will include increasing its investment in building innovative and engaging ad units and to further improve targeting and tracking; building more powerful relevance and optimization capabilities; and improving the level of service and support on offer to advertisers.

Vic Gundotra, Vice President of Engineering at Google, said: "Attracting the world's top engineering talent and people with entrepreneurial vision to Google has always been crucial to our success. AdMob's proven track record in innovating at speed will help maintain that culture - which is why we are so excited to be working with them."

Omar Hamoui, Founder and CEO of AdMob, said: "AdMob’s people, products and tools will continue to work to deliver successful campaigns for you – no interruptions.  Our product and engineering teams will keep building great products for our customers. Our business development team will keep working to maximize ad revenue for the more than 15,000 mobile Web sites and applications that make up AdMob’s publisher network."

You can read more of Hamoui's thoughts on the deal here on AdMob's website.

More to follow...