SAN JOSE, Calif. — Google has agreed to sell Motorola Mobility to Lenovo for $2.9 billion, less than two-and-a-half years after it bought the smartphone and tablet maker for $12.5 billion.
The Motorola/Lenovo combination becomes the world's third largest smartphone maker with a 6% market share behind Samsung (32%) and Apple (15%), according to Strategy Analytics. The deal comes just six days after Lenovo agreed to buy the x86 server business from IBM for $2.3 billion.
The deal is a win for all three companies, said one market watcher. Google "divests a loss-making hardware division... Motorola gains an ambitious sugar daddy with a strong presence in China," and Lenovo gets Motorola's smartphone sales, which are strongest in the US and Latin America, said a blog post from Strategy Analytics.
Google retains all but about 2,000 of Motorola's patents "to defend the entire Android ecosystem," said Google chief executive Larry Page in a blog post announcing the deal.
Motorola's 14,600 approved and 6,700 pending patents were said to have been the main motive for Google buying the company in August 2011 amid a heated patent war with Apple. Samsung's patent deals with Google and Ericsson yesterday were seen as a sign that war has cooled in the last two years.
Current Motorola chief executive Dennis Woodside, a former Google senior manager, was quoted in a Lenovo press statement, suggesting he will continue to lead the company at least through the transition. It said Motorola is the third largest maker of Android smartphones in the US and the third largest cellphone maker in Latin America.
Lenovo will pay an estimated $1.41 billion of the price at the close of the transaction, $660 million in cash and $750 million in Lenovo ordinary shares. The remaining $1.5 billion will be paid in the form of a three-year promissory note. The deal is subject to regulatory approvals.
Simultaneously integrating IBM's x86 server group and Motorola will no doubt prove a daunting management task. "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," said Yang Yuanqing, chief executive of Lenovo, speaking in the press statement.
Lenovo bought IBM's PC and notebook division for $1.75 billion in 2005.