Lenovo has just become the third largest Smartphone manufacturer in the world with the acquisition of Motorola Mobility from Google.
This Wednesday evening, Google confirmed the earlier rumors that Lenovo was planning to buy Motorola. The deal which is valued around $2.91 billion would be one of the many acquisitions by Lenovo during the last 12 months. Earlier this month, the Chinese company bought IBM’s low end x86 server business for $2.3 billion.
The deal is expected to close by the end of this year, after which Lenovo will pay $1.41 billion in cash and the rest, i.e. $1.5 billion via three year promissory notes. Though Lenovo’s shares plunged to an all-time low since 2012 by 8.2 percent, many analysts are of the opinion that the deal is good for the company. Google had purchased Motorola for $12.4 billion back in 2011 and
hence, this deal may indeed be a bargain for the company.
However, even after the sale, Google will retain a majority of the patents of Motorola, which it will license to Lenovo. In return, the deal would put Lenovo in one of the top three seats just behind Samsung and Apple in the Smartphone war. Also, the company would get access to the scale and the technology developed by Motorola along with carrier partnerships in US
and Western Europe.
In a conference call, Lenovo CEO Lang said, “We can not only turn around the Motorola business but further grow in this market,” He further added, “Motorola and Lenovo are competitive in different areas. When the deal closes, we will leverage all the capabilities of each side.”
Lenovo has already proved itself once, becoming the largest PC manufacturer in the world after the acquisition of IBM’s PC division back in 2005. So, all eyes are fixed on to the company as to what it will do with Motorola in the coming years.
Even Google is happy with the deal as CEO Larry Page said in a statement that Google will now focus on driving Android innovation for the benefit of users across the world. Motorola’s sale would also reduce the tension between Google and other hardware partners as many claimed that the company gave preference to its own hardware division, Motorola instead of the other manufacturers.
With Lenovo being the only PC manufacturer who are doing well in the age of the Smartphones and tablets, this deal would further enhance the possibility of the company doing well as a manufacturer internationally.
Although the deal is confirmed, the companies still have to obtain regulatory permissions from China as well as US before they close it.
For comments and suggestions, leave a message in the comments section below. Like and Follow our Facebook page for more stories and to stay up-to-date with the latest happenings.