Lenovo Group Ltd. agreed to buy Google Inc. Motorola Mobility phone unit for $2.91 billion, as the world’s largest personal-computer maker continues a buying spree of U.S. technology businesses. Lenovo fell 8 percent.
The sale includes $1.41 billion in cash and Lenovo stock paid at the close of the deal, with $1.5 billion to be paid in a three-year promissory note, Google said in a statement yesterday. Google will retain a majority of Motorola Mobility’s patent portfolio, with Lenovo receiving a license to the intellectual property.
“This fits perfectly with the strategy we have pursued for a couple of years,” Yang Yuanqing, chairman and chief executive officer of Lenovo, said in an interview. “Before, we only had PCs as a core business. Now, we’ve built two pillars: the first is enterprise, and the second is this mobile business.”
Investors punished Yang’s move, driving down the stock the most in 19 months on concerns Lenovo may have paid too much for a shrinking business. Motorola has reported falling sales as it lags behind Apple Inc. and Samsung Electronics Co. in smartphone shipments. The proposed deal would create the world’s third-largest smartphone vendor.
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“This time Lenovo may have jumped the shark,” Alberto Moel, an analyst at Sanford C. Bernstein & Co. in Hong Kong, said by e-mail. He called Motorola “that faded gem of the early wireless era.” Moel rates Lenovo outperform.
Date: Jan 30, 2014