Home Deals Lenovo to acquire Motorola Mobility from Google for $2.9 billion

Chinese PC giant Lenovo is to acquire the Motorola Mobility smartphone business from Google for US$2.91 billion. Google acquired Motorola Mobility just two and half years ago for US$12.5 billion.

Lenovo and Google have announced they have entered into a definitive agreement on the deal, which they say will “significantly strengthen” Lenovo’s position in the smartphone market. However, the market is asking why Google was prepared to take such a hit on a business it was so eager to get into so recently.

The joint announcement by Lenovo and Google says: “With a strong PC business and a fast-growing smartphone business, this agreement 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 strong, fast-growing smartphone business in emerging markets around the world.”

The announcement puts the purchase price at approximately US$2.91 billion (subject to certain adjustments), including US$1.41 billion paid at close, comprised of US$660 million in cash and US$750 million in Lenovo ordinary shares (subject to a share cap/floor). The remaining US$1.5 billion will be paid in the form of a three-year promissory note.

Under the deal, Lenovo, which in 2005 acquired IBM’s PC business and its PC brand, will acquire the MOTOROLA brand and Motorola Mobility's portfolio of smartphones like the Moto X and Moto G and the DROIDT Ultra series.  

Lenovo says that in addition to current products, it will also take ownership of the future Motorola Mobility product roadmap.

“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.

“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, and that our companies will not only maintain our current momentum in the market, but also build a strong foundation for the future.”

Google CEO Larry Page said the sale of Motorola Mobility to Lenovo will enable Google to “devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”

“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem.”

Motorola Mobility CEO Dennis Woodside said “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.”

The transaction is subject to the satisfaction of regulatory requirements, customary closing conditions and any other needed approvals.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

 

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