Lenovo has once again surprised the industry, this time by acquiring the Motorola Mobility smartphone business from Google for close to $3-billion.
With a strong PC business and a fast-growing smartphone business, this agreement will significantly strengthen Lenovo’s position in the smartphone market. In addition, Lenovo will gain a strong market presence in North America and Latin America, as well as a foothold in Western Europe, to complement its strong, fast-growing smartphone business in emerging markets around the world.
The purchase price is approximately $2,91-billion (subject to certain adjustments), including $1,41-billion paid at close, comprised of $660-million in cash and $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.
Lenovo, which in 2005 acquired IBM’s PC business and its legendary PC brand, will now acquire world-renowned Motorola Mobility, including the Motorola brand and Motorola Mobility’s portfolio of innovative smartphones like the Moto X and Moto G and the DROID Ultra series. In addition to current products, Lenovo will take ownership of the future Motorola Mobility product roadmap.
Google will maintain ownership of the vast majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property.
Additionally Lenovo will receive over 2 000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.
Motorola Mobility is currently the number three Android smartphone manufacturer in the US and in Latin America.
“The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones. We will immediately have the opportunity to become a strong global player in the fast-growing mobile space,” says Yang Yuanqing, chairman and CEO of Lenovo.
“We are confident that we can bring together the best of both companies to deliver products customers will love and a strong, growing business. Lenovo has a proven track record of successfully embracing and strengthening great brands – as we did with IBM’s Think brand – and smoothly and efficiently integrating companies around-the-world.
“I am confident we will be successful with this process, and that our companies will not only maintain our current momentum in the market, but also build a strong foundation for the future.”
“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere,” said Larry Page, CEO, Google.
“As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100-million people with the mobile Internet. With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo’s hardware expertise and global reach will only help to accelerate this,” said Dennis Woodside, CEO, Motorola Mobility.
On the Google blog, CEO Larry Page comments: “We acquired Motorola in 2012 to help supercharge the Android ecosystem by creating a stronger patent portfolio for Google and great smartphones for users.
“Over the past 19 months, Dennis Woodside and the Motorola team have done a tremendous job reinventing the company. They’ve focused on building a smaller number of great (and great value) smartphones that consumers love. Both the Moto G and the Moto X are doing really well, and I’m very excited about the smartphone line-up for 2014. And on the intellectual property side, Motorola’s patents have helped create a level playing field, which is good news for all Android’s users and partners.
“But the smartphone market is super competitive, and to thrive it helps to be all-in when it comes to making mobile devices. It’s why we believe that Motorola will be better served by Lenovo – which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world.
“This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere. As a side note, this does not signal a larger shift for our other hardware efforts. The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry. We’re excited by the opportunities to build amazing new products for users within these emerging ecosystems.
“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.”