Google Inc has recently made an announcement that surprised many: it is set to sell its Motorola Mobility unit to Lenovo Group Ltd for about $2.91 billion. In a statement, Google’s CEO Larry Page said the sale would allow the company to focus on innovation in the Android ecosystem. This in turn, he said, would benefit more smartphone users.
But the sale does not mean the giant technology firm would completely give up Motorola. It clarified that it would still hold on to most of the patent portfolio filed under Motorola mobility. That includes pending patent applications as well as invention disclosures. But Google would license technology to Lenovo, which in turn would obtain over 2,000 patent assets.
The deal would include $660 million in cash plus $750 million ordinary shares in Lenovo. The rest of the purchase amount ($1.5 billion) would be carried out through a three-year promissory note.
For its part, Lenovo said the pending acquisition would help it strengthen its current position in the competitive smartphone market. It would particularly boost the company’s position in North and Latin America as well as Western Europe.
Aside from the Motorola brand, the deal would include the smartphone portfolio of Motorola Mobility. Thus, the Droid Ultra series of handsets, Moto X, and Moto G would soon be under Lenovo. The company would also assume ownership of the product roadmap of the acquired brand.
In a statement, Lenovo chairman and CEO Yang Yuanqing expressed his confidence that the transaction could bring the best of the two companies together in delivering products that consumers would patronize and in putting up a growing and strong business. He referred to Motorola as an iconic brand with an innovative product portfolio and talented global team. Hopes are high that the acquisition would instantly make Lenovo an even stronger global competitor in the vast smartphone industry.
Google announced its acquisition of Motorola Mobility in 2011 along with its product portfolio. The company invested $12.5 billion to complete the transaction. Back then, Google’s goal was to boost Android. The first model from Motorola Mobility as part of Google was Moto X, which was launched in August last year. It was anticipated by the tech community but it failed to draw in target sales, prompting the business to lower price tags.
On the other hand, Lenovo is quite used to acquiring major brands. In 2005, it bought IBM’s PC brand and business. It has proven that it could successfully embrace and further strengthen big brands under its management.
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