Around two years back, the purchase of Motorola Mobility, the telephone giant by Google was one of the biggest moves in the telecom industry. However, the day has finally arrived that Google has refused to carry on with the slogging giant and finally sold it to Lenovo.
The deal has been finalised for a sum of $2.91 billion which is a loss compared to its purchase price of $12.5 billion. Google recovered well from the deal as its stocks gained in the market following the sale. On the other hand, Lenovo didn’t do that bad either considering the fact that the company is growing and wants to enter the mobile space. It wants to delve further into the smartphone segment, a fact confirmed by Yang Yuanqing, chief executive of Lenovo, who stated that this deal will make them a ‘strong global competitor’ in this segment.
Google’s efforts to enter the hardware segment were a failure with the lack of response for their new launches–the Moto X and Moto G. However, it the sale to Lenovo has worked out well for Google because they have retained unique patents. It is believed that Google’s decision was also fuelled by its association with Samsung, which has been preparing itself for a long association. Both of them recently signed a cross-license patent deal to develop the Android segment.
The payment by Lenovo is $660 million in cash, $750 million in Lenovo ordinary shares and $1.5 billion in the form of a three-year pensionary note. Lenovo is going to receive 2000 ‘patent assets’ from Google out of the total 17,000+ patents bought by them. Lenovo is planning to enter the US and Western markets which would be facilitated with this unique deal. It plans to continue its streak of buying into popular segments such as the IBM Thinkpad segment, which resulted in a good show for the Chinese giant.
Lenovo remains the fifth biggest smartphone company in the world and could solidify its position with this acquisition. With plans to expand towards the Latin American markets, Lenovo hopes to achieve better recognition through this sale. However, on the flipside, its shares in the stock exchange saw a dip following the sale. Will it be flogging the dead horse for Lenovo or will Google ever regret this sale? Only time will tell. For now, the deal seems to be a win-win situation for both the global companies.