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By | Iain Thomson 30th October 2014 20:24

Lenovo completes Motorola purchase for $2.9bn – $10bn less than Google paid for it

Ah, but the patents Google keeps were worth every penny

Three years ago, Google splashed out $12.5bn for struggling mobe manufacturer Motorola, and on Thursday the Chocolate Factory completed its sale of Motorola's physical assets to Lenovo for just $2.91bn.

Not all of the money will be going into Google's coffers right away, however. Lenovo is paying $660m in cash plus $750m in newly issued stock, and has signed a promissory note to deliver the remaining $1.5bn sometime in the next three years.

"Motorola is in great hands with Lenovo, a company that's all-in on making great devices," said Google boss Larry Page.

That's not the whole story, of course. One of the main reasons Google bought Motorola was to get hold of the firm's patent library. Motorola invented the first commercially available mobile phone and it had a huge wodge of patents that Google felt it needed to fend off attacks against Android and its other properties.

Under the terms of its deal with Lenovo, Google keeps the vast majority of Motorola's patents, although the mobile firm will bring around 2,000 of them to Lenovo. Motorola also has a license to use the patents Google is retaining, and any earlier patent cross-licensing deals between the companies will remain in place.

Meanwhile, Lenovo gets the manufacturing side of Motorola's business and a brand that has excellent recognition in the US and Europe – two markets the Chinese manufacturer is desperate to crack. Lenovo has been talking for some time about buying a Western mobile firm – Blackberry has repeatedly been mooted – and now it finally has one.

"Today we achieved a historic milestone for Lenovo and for Motorola – and together we are ready to compete, grow and win in the global smartphone market. By building a strong number three and a credible challenger to the top two in smartphones, we will give the market something it has needed: choice, competition and a new spark of innovation," said Yang Yuanqing, chairman of Lenovo.

"This partnership has always been a perfect fit. Lenovo has a clear strategy, great global scale, and proven operational excellence. Motorola brings a strong presence in the US and other mature markets, great carrier relationships, an iconic brand, a strong IP portfolio and an incredibly talented team. This is a winning combination." ®

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