Google Inc (NASDAQ:GOOG) signed a definitive agreement to sell Motorola Mobility, its subsidiary that manufactures smartphones to Lenovo Group Limited (HKSE: 992) (ADR) (OTCMKTS: LNVGY).

Terms of the agreement

Under the agreement, Lenovo Group Limited (HKSE: 992) (ADR) (OTCMKTS: LNVGY) will pay $2.91 billion to acquire Motorola Mobility. The acquisition price includes $1.41 billion ($660 million in cash and $750 million worth of ordinary shares of Lenovo), which will be paid at close of the transaction. The company will pay the remaining $1.5 billion in the form of a three-year promissory note.

Lenovo Group Limited (HKSE: 992) (ADR) (OTCMKTS: LNVGY)  will acquire the Motorola Mobility’s brand and trademark portfolio, its smartphones including Moto X, Moto G, and the DROID Ultra series, and its future product roadmap.

Google Inc (GOOG) will retain ownership of majority of the patent portfolio of Motorola Mobility including its patent applications and disclosures. The search engine giant said it will provide license its patent portfolio and other intellectual property assets to Lenovo Group Limited (HKSE: 992) (ADR) (OTCMKTS: LNVGY) as part of its ongoing relationship with the company.

In addition, Lenovo Group Limited (HKSE: 992) (ADR) (OTCMKTS: LNVGY) will also receive 2,000 patent assets from Google Inc (NASDAQ:GOOG).

Strong global smartphone competitor

In a statement, Lenovo chairman and CEO, Yang Yuanqing said, “The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global competitor in smartphones.”

Yuanqing is confident that his company will have an immediate opportunity to become a strong global player in the mobile market with the acquisition of Motorola Mobility.

On the other hand, Dennis Woodside, CEO, Motorola Mobility said, “As part of Lenovo, Motorola Mobility will have a rapid path to achieving our goal of reaching the next 100 million people with the mobile Internet. With the recent launches of Moto X and Moto G, we have tremendous momentum right now and Lenovo’s hardware expertise and global reach will only help to accelerate this.”