If you had high hopes from Google’s foray into Smartphone devices with Motorola Mobility Moto X and Moto G, here is some bad news. Lenovo is set to acquire Motorola Mobility from Google for $2.91 billion. The deal was announced by Google on its Investor relations page.
If you remember, Google acquired Motorola Mobility two years for a whopping $12.5 billion and now it’s selling it at much lower value of $2.91 billion making it one of the worst investments by Google, even though Google earlier sold Motorola’s cable box unit to the Arris Group for $2.3 billion and the deal price does not include the advanced research unit of Motorola.
The purchase price is approximately US$2.91 billion (subject to certain adjustments), including US$1.41 billion paid at close, comprised of US$660 million in cash and US$750 million in Lenovo ordinary shares (subject to a share cap/floor). The remaining US$1.5 billion will be paid in the form of a three-year promissory note.
Google is retaining most of Motorola’s patents though even after this acquisition deal with Lenovo even though the value is not specified. In a 2012 regulatory filing Google said it believed $5.5 billion of the Motorola acquisition price tag was attributable to “patents and developed technology.” Also Lenovo will gain access to 2,000+ patents of the Motorola brand and product portfolio.
Lenovo is a major stakeholder in Android handset market in China and already the No. 2 player there. Lenovo is also doing good in emerging markets around the world.Hopefully it can utilise Motorola’s brand and assets much more than what Google did.
We are not sure how the Handset makers like Samsung will react to this, but perhaps they will feel better considering the fact that Google is exiting the Smartphone devices business all together.
