Lenovo and Google announced on Oct. 30 that Lenovo's acquisition of Motorola Mobility has been completed. By acquiring the Motorola brand and its portfolio of smartphones, such as the Moto G, Moto E, Moto X, and DROID series, and its future product roadmap, Lenovo has sealed a position for itself as the third largest smartphone maker in the world.
Total purchase price was close to $2.91 billion, including more than 500 million newly issued shares of stock from Lenovo, translating to around $750 million or 4.7 percent of the company's shares, and about $660 million in cash. The remaining $1.5 billion will be paid by Lenovo through a three-year promissory note. Around $228 million was also paid separately by Lenovo as a separate cash compensation for the working capital Motorola held at closing time.
Lenovo will be operating Motorola as its wholly owned subsidiary, with the company's head office remaining in Chicago. With the acquisition, Lenovo gained close to 3,500 employees around the globe, about 2,800 of which are in the U.S., designing, engineering, selling, and supporting Motorola's range of devices.
Google will retain majority ownership of Motorola's patent portfolio, but Motorola will be given license to use patents in the portfolio, as well as other intellectual property. Motorola, however, will continue to hold more than 2,000 patent assets plus a huge amount of cross-license patent agreements. The Motorola Mobility brand and trademark will also stay with Motorola.
"This partnership has always been a perfect fit. Lenovo has a clear strategy, great global scale, and proven operational excellence. This is a winning combination," said Lenovo chairman and CEO Yang Yuanqing.
Lenovo Mobile Business Group president and executive vice president Liu Jun will be chairman of the board for Motorola Management. Motorola veteran Rick Osterloh will remain with the company as CEO and president.
According to Liu Jun, Motorola has already established itself in the market, and recent business results reflect the interest and excitement consumers have for the brand. The two companies' strengths complement each other, giving Lenovo the confidence to aim to sell over 100 million mobile devices in 2014.
All regulatory requirements and traditional closing conditions have been met by the acquisition, receiving clearance from authorities in Mexico, Brazil, China and the European Union, and the Committee on Foreign Investment in the U.S..
Motorola already has a strong presence in the market, most especially now that the Moto 360 smart watch has captured consumer attention. Within four to six quarters, Lenovo aims to make its Motorola business profitable.