Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) (HKG:0992) has concluded the acquisition of Google’s Motorola unit, a deal worth $2.91 billion. The Chinese PC maker is trying to enhance its reach in the global smartphone market by increasing sales, as it was outperformed by cross-town rival Xiaomi Corp in the third-quarter.
Motorola to help Lenovo go global
Under the deal, Lenovo will pay $1.41 billion in cash and stock, with $1.5 billion to be paid in the form of three-year promissory note, the Chinese firm said in a statement. Lenovo paid Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) $228.5 million to adjust for greater-than-expected cash on hand at closing.
Google has retained the majority of Motorola patents whereas Lenovo got a license to the intellectual property. Chief executive Yang Yuanqin said that Motorola will give Lenovo a shortcut to enter the emerging market and make the Chinese company a global player.
Following the conclusion of the deal, the Motorola headquarters will remain in Chicago. Lenovo is taking in around 3500 engineers, designers and employees of the Motorola worldwide, including 2,800 in the United States.
Google acquired the Motorola Mobility Unit in 2012 for $12.4 billion, but the deal later turned out to be a big mistake on the part of the company. Presently, Motorola smartphone models on the market include Moto X, Moto G, Moto E and DROID series.
Lenovo could have been at number three
Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) (HKG:0992) is concerned with the rising popularity of Xiaomi which outperformed Lenovo to take third place with total shipments of 17.3 million or 5.3% of the global market, according to IDC.
For the third-quarter, shipments of Lenovo smartphones increased by 38% to 16.9 million units, helping the company to bag the fourth spot globally, according to a report from International Data Corp. Market share for the company surged to 5.2% from 4.7% in the previous year.
The Chinese company is trying to make its mark internationally, and not remain confined to China. For Lenovo, international markets accounts for 20% of its smartphone shipments in the third-quarter compared to 9% in the year before. If Motorola’s shipment in Asia, Latin America and the United States are added to Lenovo’s, then the Chinese firm would have been in the number three position.
“If the deal had closed by now, they would have been in the No. 3 spot,” according to Kiranjeet Kaur, a Singapore based analyst with IDC.