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In China's largest-ever tech deal, Lenovo Group is buying Google Inc's Motorola handset division for $2.91 billion, thus making its way into a cut-throat U.S. handset market ruled by Apple Inc. This is Chinese electronics company’s second major deal on U.S. soil that followed the news of its buying IBM's low-end server business for $2.3 billion.
The deal ends search giant’s foray into making mobile devices and marks a pullback from its largest-ever acquisition. Google paid $12.5 billion for Motorola in 2012.
Google Chief Executive Officer Larry Page said that Google would be best served by focusing on smartphone software rather than devices.
"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," Lenovo's chief executive, Yang Yuanqing, said in a statement.
The purchase will give help Lenovo compete against Apple and Samsung Electronics as well as other Chinese smartphone makers in the highly lucrative U.S. arena.
For Motorola, Lenovo will pay $660 million in cash, $750 million in Lenovo ordinary shares, and another $1.5 billion in the form of a three-year promissory note, Lenovo and Google said in a joint statement, according to a report by Reuters.
"...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..." says Google in their official blog.
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