Lenovo to buy Google’s Motorola for $2.91bn

Lenovo has agreed to buy Google's Motorola handset division for $2.91 billion, in what is China's largest-ever tech deal as Lenovo buys its way into a heavily competitive US handset market dominated by Apple.

It is Lenovo’s second major deal on US soil in a week as the Chinese electronics company angles to get a foothold in major global computing markets. Lenovo last week said it would buy IBM’s low-end server business for $2.3 billion.

The deal ends Google's short-lived foray into making consumer mobile devices and marks a pullback from its largest-ever acquisition. Google paid $12.5 billion for Motorola in 2012. Under this deal the search giant will keep the majority of Motorola's mobile patents, considered its prize assets.

Shares of Google climbed 2.6 per cent to about $1,136 in after-hours trading. Google chief executive Larry Page said that Google would be best served by focusing on smartphone software rather than devices.

The purchase will give Lenovo a beach-head to compete against Apple and Samsung Electronics as well as increasingly aggressive Chinese smartphone makers in the highly lucrative US arena.

In 2005, Lenovo muscled its way into what was then the world’s largest PC market by buying IBM’s personal computer division. It has powered its way up the rankings of the global smartphone industry primarily through sales on its home turf but had considered a US sortie of late.

The deal is subject to approval by both US and Chinese authorities.

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.

Reuters