Lenovo buying Motorola from Google for $2.91 billion

After a brief sojourn in Google Inc.’s hands, Motorola Mobility has got another buyer, with Google announcing today it was selling the smartphone brand to Lenovo Group Limited for $2.91 billion U.S.

Lenovo will pay Google $1.41 billion at the close of the deal, with about $660 million in cash and $750 million in Lenovo ordinary shares. The last $1.5 billion is slated to be paid in the form of a three-year promissory note.

Google will also hang onto most of Motorola’s patents, including patent applications that are currently pending. Lenovo will get more than 2,000 other patent assets, a license on remaining patents, and the rights to the Motorola brand and trademark portfolio.

This marks the second U.S. acquisition the Chinese PC and smartphone maker has made in the space of a week. On Jan. 23, it announced it was buying IBM Corp.’s x86 server and networking division for about $2.3 billion U.S.

Google only acquired Motorola back in 2012, paying about $12.5 billion in an effort to boost the Android ecosystem and to make its own mobile devices. So it might seem strange it’s already selling off the division that created the Moto G and the Moto X smartphones, both of which have garnered good ratings from tech media outlets.

In a blog post, Google CEO Larry Page had this to say:

“The smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo—which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere,” he wrote.

However, he noted the Motorola sale doesn’t mean Google will be moving away from building hardware entirely.

“The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems.”

With Google backing out of the smartphone race, it’s difficult not to wonder about Lenovo’s chances in breaking into the smartphone market, an already crowded space. However, given its success in turning around the ThinkPad brand after purchasing it from IBM in 2005, the company sounds sure of itself.

“The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” said Yang Yuanqing, chairman and CEO of Lenovo, in a statement.

“We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business. Lenovo has a proven track record of successfully embracing and strengthening great brands – as we did with IBM’s Think brand – and smoothly and efficiently integrating companies around-the-world. I am confident we will be successful with this process.”

The deal still has yet to be approved in the U.S. and China.

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Candice So
Candice Sohttp://www.itbusiness.ca
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

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