China-based PC and smartphone maker Lenovo has announced that it has agreed to acquire Google’s Motorola mobile division for $2.91, marking it China’s largest-ever tech deal.
According to the joint statement by both the companies, Lenovo will be paying $660 million in cash, $750 million in shares and remaining $1.5 billion as a 3-year promissory note to Google for Motorola.
Last week, the company has acquired the whole IBM’s low-end server business for $2.3 billion, which is the second-largest tech deal happened by a Chinese company. It has already acquired the IBM’s PC and laptop business in 2005, while it has entered into the smartphone market in 2012 and as of now, the company is the largest smartphone-maker in China.
Google bought the Motorola in 2012 for $12.5 billion and after the deal with Lenovo, Google will be holding the majority of Motorola patents within its catalog, considered its prized assets. But, Lenovo said that it will receive about 2000 patents from the deal. Ultimately, Google will be more focusing on the “smart” software instead of “smart” hardware. The search giant already sold Motorola’s cable television set-top box division to Arris Group for $2.35 billion in late 2012.
Lenovo is one of the many smartphone-makers who want to enter into the U.S. market, such as Xiaomi’s plans to crack the U.S. market dominated by Apple and Samsung. With the purchase of the Motorola Mobility, Lenovo will be having the direct access to the market, which could help the company to expand its mobile segment to other parts of the world.
The Motorola-Lenovo deal will conclude after the U.S. and Chinese authorities’ approval. Due to the political issues, the Chinese company may face the scrutiny by the regulators for both the Motorola and IBM acquisitions.
Currently, 2 Chinese smartphone makers Zte and Huawei are selling their devices in U.S., which managed to cover 5.7% and 3% of phone market share in Q3 2013, respectively. Whereas, according to IDC research, U.S. based Apple holds account of 36.2% and Samsung holds 32.5% of market share in U.S. As of now, Lenovo is in 5th rank in global smartphone sales with around 4.5% market share, which was in 3.3% in 2012.
From this deal, Google will be washing its hands from the continued Motorola’s losses in last few quarters and it will be more focusing on the Android software and Chrome platform.
With the good smartphones such as Moto X and affordable Moto G in hands, Motorola will never die! But, what about the BlackBerry? It still a very much struggling company, which was once the market leader in mobile and enterprise security business.