Post Motorola deal, Google to own 5.94% stake in Lenovo

Tags: Companies
Google's decision to sell Motorola Mobility to Lenovo will allow the internet giant to hold 5.94 per cent stake worth $750 million in the Chinese computer maker.

As per the agreement terms between Google and Lenovo, the "share consideration (subject to the share adjustment) in the form of consideration shares equal in aggregate value to $750 million (equivalent to approximately 5.82 billion Hong Kong dollars)."

This consideration, Lenovo said "will be based upon the closing share price, but limited to a maximum of 618,301,731 shares and a minimum of 505,883,235 shares, credited as fully paid and to be issued to Google (or its designee) at completion."

According to a filing in the Hong Kong Stock Exchange, the maximum limit works about to 5.94 per cent stake in Lenovo.

Besides, Lenovo will pay $660 million in cash and the remaining $1.5 billion in a three-year promissory note.

Last month, the California-headquartered firm said Lenovo will buy Motorola for $2.91 billion, a move that will end the tech giant's unsuccessful run in the fiercely competitive handset business.

The acquisition, possibly the biggest Chinese tech deal ever, allows Google to keep the "vast majority" of around 17,000 patents it acquired when it bought the struggling smartphone maker Motorola for $12.5 billion in 2012.

Google, which has struggled to compete in the cut throat phone hardware business, saw its share of global smartphone market fall to about 1 per cent last year from 2.3 per cent a year earlier, research firm IDC data shows.

Motorola has been running semi-independently from Google since the acquisition went through.

Under Google, the smartphone maker rolled out its Moto X and Moto G Android smartphone, but still failed to swing back to profit. It reported a loss of $249 million in Q3 of 2013, up 24 per cent from the same period a year ago.

Lenovo expects that Motorola's acquisition will provide the Chinese company a firm foothold in the global handset market dominated by the likes of Apple and Samsung and help it become the world's No. 3 smartphone maker.

Presently, the Beijing-based company is the second biggest smartphone seller in China and comes fourth in global smartphone sales, after Samsung, Apple and Huawei.

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