In possibly the biggest Chinese tech deal ever, lenovo will buy Motorola Mobility from Google for $ 2.91 billion as it seeks to become the No. 3 smartphone maker, ending the Internet giant's unsuccessful run in the competitive handset business.
Google, however, will keep the "vast majority" of around 17,000 patents it acquired when it bought the struggling Motorola for $ 12.5 billion in 2012.
"With the deal, we expect to become the No. 3 smartphone manufacturer in the fast-growing global market," Yang Yuanqing, lenovo's chairman and CEO said, adding the company has set the goal of selling 100 million smartphones in 2015.
Google has struggled to compete in the cut throat phone-hardware business—its share of the world-wide smartphone market fell to about 1 per cent last year from 2.3 per cent a year earlier, according to research firm IDC.
Motorola has been running semi-independently from Google since the acquisition went through. last year, Motorola released its first flagship phone, the Moto X, since becoming a Google company. The Moto X was well-reviewed, but it's unclear how many were sold.
Motorola has steadily been dropping the Moto X's price since the launch last fall. In Q3 2013, Motorola sales stood at $1.18 billion, down from $1.78 billion a year ago.
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.
Google's CEO larry Page said that he believes lenovo has "the expertise and track record to scale Motorola into a major player within the Android ecosystem."
However, stocks markets appear not to be enthused with lenovo buying what was Google's biggest acquisition.
At Hong Kong, lenovo shares slumped 8.2 per cent on fears of cash drain while Google scrip gained 2.5 per cent in US pre-market trades.
Dennis Woodside, CEO of Motorola Mobility, said his company has tremendous momentum right now with the recent launches of new products, and that lenovo's hardware expertise and global reach will only help to accelerate this.
The move to buy Motorola is expected to provide the Chinese company a firm foothold in the global handset market dominated by the likes of Apple and Samsung.
So far the Beijing-based company is the second biggest smartphone seller in China and comes in fourth in global smartphone sales, after Samsung, Apple and Huawei.
"Its all about patents. The deal will help lenovo make its presence strong in the US market. Motorola is a strong brand in the US....Google wants to focus on pushing Android devices," said Vishal Tripathi, Principal Analyst with Gartner's Global Consumer Tech and Markets team.Some experts see Google selling Motorola as a step which helps the US based company avoid the concern that it would give preferential treatment to Motorola for its Android operating system.