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Lenovo acquires Motorola Mobility from Google for US$2.9b

By Zhu Shenshen | January 30, 2014, Thursday | Online Edition

Lenovo Group Ltd announced today to use US$2.9 billion to acquire Motorola Mobility smart phone business from Google Inc, the latest expansion of the world’s No.1 personal maker beyond its core PC business.

The deal will make Lenovo the world’s No. 3 smart phone vendor in future compared with current No. 5 position and help it to challenge market leaders Apple Inc and Samsung Electronics in the market of connected devices referring to computer, mobile phone and tablet, analysts said.

The purchase price is approximately US$2.91 billion, including US$1.41 billion paid now as US$660 million in cash and Lenovo shares. The remaining US$1.5 billion will be paid three years later.

Lenovo, which acquired IBM’s PC business in 2005, will acquire Motorola Mobility including Motorola brand, smart phones like the Moto X and Moto G and about 2,000 related patents. Google, which acquired Motorola Mobility in 2011 for US$12.5 billion, will maintain ownership of the vast majority of the Motorola Mobility patent portfolio. It promised to help Lenovo develop phones with Google-developed Android system through cross-license, both sides said.

“The Motorola brand and asset will help Lenovo strengthen position in the global smart phone market especially in America and get a foothold in Western Europe,” said Wang Jieping, analyst at US-based research firm International Data Corp or IDC.

Motorola Mobility is now the No. 3 Android smart phone maker in the world. Lenovo is now the world’s No. 5 smart phone maker with 4.3 percent market shares, compared with Samsung’s 31 percent and Apple’s 16 percent, according to IDC.

It was the second acquisition this month following Lenovo said to use US$2.3 billion to acquire IBM’s X86 sever business. Both deals, with a combined volume of US$5 billion, have made January the biggest investment volume month for Lenovo up to now.

“It 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 chief executive of Lenovo.

 Lenovo has a proven track record of successfully embracing a great brands – as it did with IBM’s Think brand, Yang added.

Lenovo will use six to nine months to finish the deal and launch new phones in the US market by the end of 2015. It will remain Motorola brand phone in China. In 2015, it aims to sell 100 million phones, according to Yang.

“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, chief executive of Google.

The transaction still needs approval from regulators.

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