Google Inc (NASDAQ:GOOG) is said to be near a deal to sell its Motorola handset unit to Lenovo Group Ltd. (OTCPINK:LNVGY) (HKG:0992). Reuters reports that the deal is said to be worth nearly $3 billion and will give the Chinese handset maker a foothold in the U.S. market.
Lenovo, Google in final talks
According to unnamed sources cited by Reuters, Lenovo Group Ltd. (OTCPINK:LNVGY) (HKG:0992) and Google Inc (NASDAQ:GOOG) are in the last stages of the negotiations about the deal. The sale of Motorola includes the new Moto X and Moto G smartphones and a number of patents. The announcement about that deal could come as early as today some time.
In order to pay for Motorola, Lenovo is said to be planning to use cash and stock, plus deferred payments. Credit Suisse Group is reportedly advising Lenovo, and Lazard Ltd is reportedly advising Google Inc (NASDAQ:GOOG).
Google struggled in the handset business
Google Inc (NASDAQ:GOOG) has been struggling to make its Motorola division profitable. The search giant bought Motorola in 2012 for $12.5 billion. At that time, Google said it was mostly interested in Motorola’s patents. Now the company appears to be ready to sell the handset part of Motorola, which has been losing hundreds of millions of dollars every quarter. Although the sale to Lenovo will include some of Motorola’s patents, the deal is said to be mainly focused on the handset division.
The Moto X came out toward the end of last year and was the first handset made after Google bought Motorola. The device hasn’t really caught on, and Google has continued to struggle in hardware. The sale of the division may not come as too much of a surprise since Google has been losing so much on Motorola. Also Lenovo has said it wants to move into the U.S. market this year. The Chinese handset maker reportedly made a bid for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) last year, but BlackBerry turned that bid down.