Google sells off Motorola unit to Lenovo for $3bn

Oliver Smith
Follow Oliver
LENOVO Group said last night it agreed to buy Google’s Motorola handset division for $2.91bn, less than two years after Google paid $12.5bn to buy the firm.

The deal ends Google's short-lived foray into making consumer mobile devices and marks a pullback from its largest-ever acquisition.

However, Google will keep several lucrative patents, including the Android smartphone and tablet software. Lenovo picks up about 2,000 Motorola patents and its phone manufacturing operations.

For Motorola, Lenovo will pay $660m in cash, $750m in Lenovo ordinary shares, and another $1.5bn in the form of a three-year promissory note, Lenovo and Google said in a joint statement.

The purchase will give Lenovo a beach-head to compete against Apple and Samsung Electronics as well as increasingly aggressive Chinese smartphone makers in the highly lucrative US arena.

In 2005, Lenovo muscled its way into what was then the world’s largest PC market by buying IBM's personal computer division. It has powered its way up the rankings of the global smartphone industry primarily through sales on its home turf but had considered a US sortie of late.

“Using Motorola, just as Lenovo used the IBM ThinkPad brand, to gain quick credibility and access to desirable markets and build critical mass makes a lot of sense,"” said Forrester Research analyst Frank Gillett.

It is China’s largest tech deal and Lenovo’s second major deal on US soil in a week as the Chinese electronics company angles to get a foothold in major global computing markets. Lenovo last week said it would buy IBM’s low-end server business for $2.3bn.

The sale came as Google comes close to settling a three-year European antitrust probe, with its third proposal to the European Union regulator described as being “much better”.