Internet search company Google will own a 5.94 percent stake in China's Lenovo Group Ltd worth $750 million once Lenovo's deal to buy Google's Motorola handset division closes, according to a disclosure on the Hong Kong stock exchange.
Google would take 618.3 million Lenovo shares at $1.213 per share, the stock exchange said late on Thursday.
Lenovo said last week it would acquire the Motorola handset business, along
with some 2,000 patents, for $2.91 billion. That came days after an
announcement the company would purchase IBM's low-end server unit for
Lenovo will receive over 2,000 "patent assets" as
part of the Motorola transaction, the companies said, but it remains
unknown which will change hands and whether they might be subject to
extra scrutiny from regulators.
For Motorola, Lenovo will pay $660
million in cash, $750 million in Lenovo ordinary shares, and another
$1.5 billion in the form of a three-year promissory note, Lenovo and
Google said in a joint statement.
Google executive chairman Eric
Schmidt on Monday expressed confidence that Lenovo would gain approval
from U.S. regulators to buy Google's Motorola smartphone hardware
business in what would be China's biggest technology acquisition to
Schmidt said he saw "a good chance" of the deal passing
muster with the Committee on Foreign Investment in the United States, or
CFIUS, which monitors acquisitions by overseas corporations.
at a dinner organized by the Cato Institute think tank, Schmidt said
Lenovo's experience buying IBM's ailing personal computer division in
2005 would stand it in good stead as it seeks the green light to acquire
the Motorola business.
"There's a good chance of it being OK,"
Schmidt said, adding, "We would not have done the transaction if we
thought it would be in trouble."
The deals will be reviewed by CFIUS to ensure they do not threaten national security.
$2.91 billion acquisition is being called China's largest-ever tech
deal, with the company looking to buy its way into a heavily competitive
U.S. handset market dominated by Apple.
The purchase will give
Lenovo a beach-head to compete against Apple and Samsung Electronics as
well as increasingly aggressive Chinese smartphone makers in the highly
lucrative U.S. arena.
The deal ends Google's short-lived foray
into making consumer mobile devices and marks a pullback from its
largest-ever acquisition. Google paid $12.5 billion for Motorola in
2012. Under this deal the search giant will keep the majority of
Motorola's mobile patents, considered its prize assets.
Written with inputs from Reuters