Lenovo to buy Google’s Motorola in China’s largest tech deal

Lenovo to buy Google's Motorola in China's largest tech deal

Lenovo Group said on Wednesday (29 January) it agreed to shop for Google Inc’s Motorola handset analysis for $2.91 billion, in what is China’s largest-ever tech accord as Lenovo buys its way into a heavily advancing US handset bazaar bedeviled by Apple Inc.

It is Lenovo’s additional above accord on US clay in a anniversary as the Chinese electronics aggregation angles to get a ballast in above all-around accretion markets. Lenovo aftermost anniversary said it would shop for IBM’s low-end server business for $2.3 billion.

The accord ends Google’s brief attack into authoritative customer adaptable accessories and marks a pullback from its largest-ever acquisition. Google paid $12.5 billion for Motorola in 2012. Under this accord the chase behemothic will accumulate the majority of Motorola’s adaptable patents, brash its award-winning assets.

Shares in Google climbed 2.2 per cent to about $1,131 in after-hours trading. Reuters appear the accord beforehand on Wednesday, citation sources accustomed with the deal.

The acquirement will accord Lenovo a beach-head to attempt adjoin Apple and Samsung Electronics as able-bodied as more advancing Chinese smartphone makers in the awful advantageous US arena.

In 2005, Lenovo muscled its way into what was again the world’s more good PC bazaar by affairs IBM’s claimed computer division. It has powered its way up the rankings of the all-around smartphone industry primarily through sales on its home accommodation but has brash a US attack of late.

“Using Motorola, aloof as Lenovo acclimated the IBM ThinkPad brand, to accretion quick believability and admission to adorable markets and body analytical accumulation makes a lot of sense,” said Forrester Analysis analyst Frank Gillett.

“But Motorola has not been cutting the lights out with designs or sales volumes in smartphones. So the amount is artlessly in cast acceptance to accomplish bazaar acceptance faster – and to aggrandize the architecture and business aggregation with aptitude accomplished at US and Western markets.”

The accord is accountable to approval by both US and Chinese authorities.

Chinese companies faced the best analysis over their US acquisitions in 2012, according to a address issued in December by the Committee on Foreign Investment in the United States. Analysts say political issues could billow the deal, abnormally with Lenovo aggravating to allowance the IBM accord at the aforementioned time.

In the accord for the Motorola handset business, Lenovo will pay $660 actor in cash, $750 actor in Lenovo accustomed shares, and addition $1.5 billion in the anatomy of a three-year promissory note, Lenovo and Google said in a collective statement.

Rise Of The Chinese

In two years, China’s three more good handset makers – Huawei, ZTE Corp and Lenovo – accept alveolate into the top ranks of all-around smartphone charts, helped in allotment by their huge calm bazaar and dispatch allocution of a fresh force in the smartphone wars.

Huawei beneath to animadversion on the accord on Wednesday.

In the United States, the Chinese companies abide to attack with low cast awareness, perceptions of inferior affection and alike aegis concerns. In the third analysis of aftermost year, ZTE and Huawei accounted for 5.7 per cent and 3 per cent of all phones awash in the United States, respectively, abaft Apple’s 36.2 per cent and Samsung’s 32.5 per cent, according to analysis abode IDC.

Lenovo had negligible bazaar share

Globally, however, Lenovo ranked fifth in 2013 with a 4.5 per cent bazaar share, according to IDC. That’s up from 3.3 per cent in 2012 and about nil a brace years afore that.

On the Google front, the Internet aggregation has struggled to about-face about loss-making Motorola. Now it’s accommodating to footfall aback from the accouterments amphitheatre and bandy its weight abaft handset makers that bear its Android software, Kantar analyst Carolina Milanesi said.

“It all credibility to Google cerebration in the abbreviate run that they’re more good off action on Samsung and befitting them close,” Milanesi said. “And of advance now they’re enabling a additional able agent (Lenovo) in the Android ecosystem.”

Analysts had apparent Google’s Motorola accretion as primarily a way to defended the company’s accession of patents amidst the technology sector’s accretion acknowledged battles.

Many industry assemblage were afraid that Google did not anon advertise the accouterments analysis afterwards the accord closed, allotment instead to accomplish Motorola a abstracted company.

It did advertise Motorola’s cable television set-top box business to Arris Group Inc for $2.35 billion at the end of 2012.

Lenovo is actuality brash by Credit Suisse Group while Lazard Ltd brash Google on the transaction, the bodies said.