Google is selling Motorola Mobility to Lenovo for $2.91 billion, a deal that pundits believe will give the Chinese-owned Lenovo the key to establishing its presence in the US market. The trade acquisition includes cash and stock.
Part of the deal requires that Google retains a vast majority of Motorola’s patents, while 2,000 patents and a license on the remaining patents will go to Lenovo. Lenovo is expected to cough out $660 million in cash and $750 million in stock value, while the balance of $1.5 billion will be paid over a three-year period.
Yang Yuanqing, chief executive officer of Lenovo, stated that his company doesn’t have a precise plan on what to do with Motorola, but expects to be able to turn the struggling company around into a profitable one. He added that the new owners hope to sell about 100 million Motorola smartphones within the next one year upon its acquisition. Lenovo is banking on its success in shipping an estimated 45 million Lenovo smartphones around the world in 2013, which was a 90 percent growth on its previous year.
Lenovo will use Motorola’s name to enter the US smartphone market
“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem,” Google CEO Larry Page said in a statement. “This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”
Though Google is offloading Motorola at a much lesser value than it acquired it (Google bought Motorola Mobility for $12.5 billion in 2012), some believe that it is in the interest of the market that the company is sold to interested parties hoping to turn around its fortunes.