Today Lenovo has completed the purchase of Motorola from Google. Google retains the ownership of the bulk of Motorola patent portfolio, with Lenovo getting a license to the patents. Some 2,000 patents and a large number of patent cross-licensing deals will go with Motorola to Lenovo.
Motorola will act as a wholly-owned subsidiary, retaining almost 3,500 employees, and will remain in headquartered in Chicago. Lenovo says it expects Motorola to become profitable in four to six quarters.
The total purchase price at close was approximately $2.91 billion, including approximately $660 million in cash and 519,107,215 shares of Lenovo stock, with an aggregate value of $750 million. The remaining $1.5 billion will be paid to Google by Lenovo in the form of a three-year promissory note.
Earlier – Lenovo buys Motorola for $2.91 Billion, confirms Larry Page – What is sold, what is retained
A very surprise move, did anyone see that coming? all of a sudden, Motorola doing so good under Google with the Moto X and Moto G to start with, has been sold to Lenovo for a sum of $2.91 billion. As the message from Google CEO Larry Page says, We’ve just signed an agreement to sell Motorola to Lenovo for $2.91 billion. As this is an important move for Android users everywhere, I wanted to explain why in detail.
Larry explained about the new owner in a few lines, saying that they would be retaining the Motorola brand as it is:
Lenovo has the expertise and track record to scale Motorola into a major player within the Android ecosystem. They have a lot of experience in hardware, and they have global reach. In addition, Lenovo intends to keep Motorola’s distinct brand identity—just as they did when they acquired ThinkPad from IBM in 2005. Google will retain the vast majority of Motorola’s patents, which we will continue to use to defend the entire Android ecosystem.
But did you notice the last line there? that’s what Motorola was acquired by Google for earlier! The Patents. Google is going to retain the vast majority of Motorola’s patents, and thus, their job is done. Lenovo though won’t go with just the brand name in the deal, as it is going to receive 2,000 patent assets and the Motorola Mobility brand and trademark.
With regards to the payment for the deal, of that $2.91 billion, $1.41 billion will be paid at the close of the deal. $660 million will be comprised of US cash and $750 million in Lenovo ordinary shares. The remaining $1.5 billion will be paid in the form of a three-year promissory note.
This is not the first sell-off of one of the parts of Motorola Mobility, because Google earlier had sold the cable box division for $2.4 billion. There have been reports that Motorola has been losing money every quarter in the consumer division, and thus Google better sold this than simply dumping the company, and this is a plus for Lenovo, the company which has been trying quite a lot to establish itself in the smartphone market, and they had reportedly submitted a bid to buy Blackberry in October (was rumored in October 2013), but the deal luckily didn’t go well.
This is not a very rare purchase from Lenovo, because in the recent times, this is what done by them:
- Purchased IBM’s personal computer division for $1.25 billion – made itself the third largest computer maker with the purchase, and now has scaled up to become the largest PC shipping company in the world
- 2013 2nd half – Lenovo overtook HP
Now Lenovo is planning to purchase IBM’s x86 server business for $2.3 billion. Although Google didn’t make good profits since the acquisition of Motorola, they would be happy to hold the patents and sell Motorola off, to a company which has some strong plans to grow itself.
What else it retained by Google?
Apart from the vast majority of patents, the Motorola’s Advanced Technology and Projects group will be staying with Google. The Project Ara and such projects are part of this, and will be a part of Google. The entire group under this, including the leader Regina Dugan will be moved to Google to the team run by Sundar Pichai.
Hold your Moto X or Moto G and now think, did you buy this because you thought it was being made under the eyes of Google? doesn’t matter much but still, we are sure many had purchased their Moto for this reason.
Source: Google Blog
