Back in 2011 Google agreed to purchase Motorola Mobility for a cool $12.5 billion. Aside from taking control of the hardware division the search giant was also able to get Motorola’s patent portfolio which reportedly amounted to more or less 17,000. Google’s interest on Motorola was more on its patents than its devices. This is why Motorola has been kept as a separate business but still being run by a former Google executive, Dennis Woodside.
Despite having a series of great products such as the Moto G, Moto X, Moto Maker, and the upcoming Project Ara, Motorola is still suffering from losses which Google has not been able to stop. In the third quarter of 2013 operating losses of $248 million were reported. This is probably why we are now getting reports that Google will be selling the Motorola mobile division to Lenovo. Reuters is reporting that the deal is close to $3 billion while China Daily says it is around $2 billion.
Sources familiar with the matter say that the deal is already in its final stages. If it pushes through then Lenovo will own the Moto X and Moto G smartphone brand as well as more than 10,000 mobile communications patents. It will also allow the China based company to gain a foothold into the lucrative U.S. mobile market which it hasn’t achieved yet.
Right now the U.S. market is dominated by Apple and Samsung. Things might change in 2015 as Yang Yuanqing, chairman and CEO of Lenovo, said that the company’s smartphones and tablets will be entering the U.S. and western European markets.
This is going to be the second largest deal made in U.S. soil in just a week by Lenovo as it aims to expand its global presence. Previously the company announced that it was going to acquire IBM’s low-end server business for $2.3 billion.
Lenovo did not make a comment on this only saying that an announcement regarding a “major acquisition” is about to be made soon. This announcement could be made this coming Wednesday.
Lenovo is reportedly going to use a combination of cash and stocks as well as deferred payments.
Advising Lenovo on this deal is Credit Suisse Group while Google is being advised by Lazard Ltd.