Lenovo to buy Motorola Mobility from Google for $2.91 bn

Chinese personal computer maker Lenovo Group yesterday struck a deal to buy Google Inc's Motorola Mobility, for $2.91 billion, in what would be China's largest-ever acquisition in the technology industry.

Google had acquired Motorola's handsets division after obtaining regulatory approvals in 2012, (See: Motorola Mobility shareholders approve merger with Google), After Motorola split itself into two (See: Motorola splits into `mobility' and `solutions' units ) in January 2011,  

This is the Beijing-based Lenovo's second big deal this month after it agreed last week to buy IBM's low-end server business for $2.3 billion. (See: Lenovo Group to buy IBM's server business for $2.3 billion)

Lenovo, which in 2005 acquired IBM's PC business and its iconic PC brand, will now acquire Motorola Mobility, including the Motorola brand and Motorola Mobility's portfolio of smartphones like the Moto X and Moto G and the DROIDTM Ultra series. 

In addition to current products, Lenovo will take ownership of the future Motorola Mobility product roadmap.

Lenovo will pay $1.41 billion, which includes $660 million in cash and $750 million in Lenovo ordinary shares and the remaining $1.5 billion will be paid in the form of a three-year promissory note.

Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures, but license this portfolio of patents and other intellectual property to Lenovo. 

Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.

With a strong PC business and a fast-growing smartphone business, this deal will significantly strengthen Lenovo's position in the smartphone market.

In addition, Lenovo will gain a strong market presence in North America and Latin America, as well as a foothold in Western Europe, to complement its fast-growing smartphone business in emerging markets.

Motorola Mobility is currently the third-largest Android smartphone manufacturer in the US and the third-largest manufacturer overall in Latin America, while Lenovo is the world's fifth-largest seller of smartphones with a 4.5 per cent market share.

Gaining control of Motorola's trove of more than 17,000 patents on mobile phone technology was the primary reason Google paid a whopping $12.5 billion for Motorola Mobility although the smartphone maker had lost its eminence in the market and had lost money for four consecutive years.

To cut its losses from the acquisition, Google shut down almost all of Motorola Mobility's South Korean operations in 2013, indefinitely suspended operations at its phone assembling plant in Chennai in India, and cut about 4,000 jobs globally at Motorola Mobility.

It also sold Motorola Mobility's manufacturing operations in Tianjin, China, for an undisclosed sum and gave the management and operations of its Jaguariuna facility in Brazil to Singapore-based contract manufacturer Flextronics International.

It also sold Motorola Mobility's  cable television set-top box business to Arris Group for $2.35 billion at the end of 2012.

Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere,'' said Larry Page, CEO of Google.

''As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet. With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo's hardware expertise and global reach will only help to accelerate this,'' said Dennis Woodside, CEO, Motorola Mobility.