It looks like what started as a rumor earlier today proved to be 100% accurate, as Lenovo and Google have just announced they have reached an agreement for the acquisition of Motorola Mobility smartphone business.
Google purchased Motorola Mobility back in 2011 for $12.5 billion (€9.15 billion) and the agreement it has reached today with Chinese company Lenovo mentions it will only get $2.91 billion (€2.13 billion) for the company.
That means Google has decided to sell Motorola at a huge loss. Even though the Motorola Mobility's smartphone business shrank over the years due to layoffs and closing of operations in almost all countries except the United States and Canada, the selling price is still far from what Google originally paid for it.
The good news for Google is that the search giant will keep most of Motorola's patents, including current patent applications and invention disclosures, like Project Ara for example.
Lenovo will still receive a license to Motorola's portfolio of patents and other intellectual property, along with over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.
Aside from the current smartphones Motorola is already successfully selling in various countries (Moto X and Moto G), Lenovo has also confirmed it will take ownership of the future Motorola Mobility's roadmap.
Under agreement, Lenovo will pay $1.41 billion (€1.03 billion) at close, comprised of $660 million (€483 million) in cash and $750 million (€549 million) in Lenovo ordinary shares (subject to a sharecap/floor). Furthermore, the remaining $1.5 billion (€1.1 billion) will be paid in the form of a three-year promissory note.
“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,” said Yang Yuanqing, chairman and CEO of Lenovo.
“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.