Lenovo completes $2.9bn Motorola deal

Chinese vendor finally gets hands fully on brand and product portfolio after announcing intention to buy the company from Google earlier this year

Motorola is to operate as a wholly owned subsidiary now it has officially changed ownership from Google to Lenovo.

Earlier this year, Lenovo announced its intentions to buy Motorola, signalling a serious play for the smartphone market as it looks to grab share from rivals such as Samsung and Apple.

The acquisition was the Chinese vendor's second deal in the US after it grabbed IBM's low-end server business for $2.3bn (£1.4bn) in the same month.

Owning Motorola means Lenovo is the third-largest maker of smartphones globally. The deal brings an extra 3,500 employees to Lenovo's fold, including about 2,800 in the US who design, engineer, sell and support Motorola's devices.

Yang Yuanquing, chief executive of Lenovo, said: "Today we achieved a historic milestone for Lenovo and for Motorola - and together we are ready to compete, grow and win in the global smartphone market. By building a strong number three and a credible challenger to the top two in smartphones, we will give the market something it has needed: choice, competition and a new spark of innovation.

"This partnership has always been a perfect fit. Lenovo has a clear strategy, great global scale, and proven operational excellence. Motorola brings a strong presence in the US and other mature markets, great carrier relationships, an iconic brand, a strong IP portfolio and an incredibly talented team. This is a winning combination."

However, in a shrewd move, Google will keep hold of "a majority" of the product patents - which will be licensed out, it was revealed - and the firm itself will keep more than 2,000 patent assets and a large number of patent cross-licence agreements, as well as the Motorola Mobility brand and trademark portfolio.

Larry Page, chief executive of Google, added: "Motorola is in great hands with Lenovo, a company that's all-in on making great devices."

The total purchase price at close was approximately $2.91bn, including around $660m in cash and 519,107,215 newly issued ordinary shares of Lenovo stock, with an aggregate value of $750m. The remaining $1.5bn will be paid to Google by Lenovo in the form of a three-year promissory note. A separate cash compensation of approximately $228m was paid by Lenovo to Google primarily for the cash and working capital held by Motorola at the time of close.