Lenovo buys Motorola Mobility from Google for $2.9B
Chinese PC and smartphone maker Lenovo has agreed to buy phone manufacturer Motorola Mobility from Google for $2.9 billion, Google announced on Wednesday.
The $2.9 billion price includes $660 million in cash, $750 million in Lenovo shares to be tendered at the close of the deal and $1.5 billion in a three-year promissory note. Motorola Mobility's smartphone portfolio includes Moto X and Moto G as well as the Droid Ultra series.
The transaction will not transfer most of Motorola Mobility's patent portfolio, including current patent applications and invention disclosure. Google retains ownership of those assets, but will license them to Lenovo.
Google is selling Motorola Mobility at a deep discount, having paid $12.5 billion to acquire it less than two years ago, notes the New York Times.
"The deal is not a total financial loss for the extremely wealthy Google. In addition to keeping billions of dollars' worth of patents, it essentially turned Lenovo into a factory for its Android operating system, and also picked up some cash," the newspaper observes.
Colin Gillis, an analyst at BGC Partners, tells the New York Times that Google makes its money "from people watching YouTube ads and doing searches. They don't necessarily need to be the hardware maker ... Motorola's been a millstone and a drag on results."
Jack Gold, principal analyst at J. Gold Associates, believes the deal makes sense for both Google and Lenovo. Google doesn't "need to be in the device business, and [the deal] got them into some hot water with their leading OEMs. Lenovo gets to buy into a major brand with still substantial channels outside of Lenovo's primary mobile presence in China. And it gets an engineering staff that knows phones for worldwide sales," Gold said.
- read the Google release
- read the New York Times article
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