Google to sell Motorola to Lenovo for $2.91 billion

The Moto X is one of a few phones Motorola has released since being purchased by Google in 2011.

By Salvador Rodriguez

Jan. 29, 2014 2:02 PM PT

<i>This post has been updated, as indicated below.</i>

Google Inc. has agreed to sell Motorola Mobility to Lenovo Group for $2.91 billion, the Silicon Valley company confirmed Wednesday.

Chief Executive Larry Page confirmed the deal in a blog post Wednesday, after reports from Reuters, China Daily and TechCrunch.

Google bought Motorola for $12.5 billion in 2011 and had allowed the phone maker to work independently over the last few years. But despite launching some innovative devices, Motorola could not find success under Google’s ownership. In its most recent quarter, Motorola reported a loss of $248 million.

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Motorola will have a better shot at success under Lenovo than with Google, Page said. Google, which manages the Android operating system used by several phone makers, did not have the ability to go “all-in” on Motorola as would be required to make the company successful.

“It’s why we believe that Motorola will be better served by Lenovo -- which has a rapidly growing smartphone business and is the largest (and fastest-growing) PC manufacturer in the world,” Page said. “This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”

Lenovo said it will pay $1.41 billion in cash and stock once the deal has been approved by both the U.S. and China. It will pay the remaining $1.5 billion in the form of a three-year promissory note, the company said.

This is the Chinese company’s second major U.S. acquisition this month. Earlier, Lenovo purchased IBM’s x86 server unit for $2.3 billion.

China Daily said Lenovo will enter the U.S. with its tablet and smartphone business by 2015. The Motorola acquisition will help make that happen.

As for Google, the company appears to have taken a huge loss in the Motorola purchase, but Page said the sale will not affect the company’s other hardware operations.

Google is working on Glass, a wearable device similar to glasses, and it also recently purchased Nest, a start-up that makes smart home appliances, for $3.2 billion.

[Updated 2:16 p.m. PST Jan. 29: This story has been updated to provide Google’s confirmation of the deal.]

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