Google has signed an agreement to sell its Motorola handset division to Lenovo for $2.91 billion.
Larry Page, Google CEO and cofounder, confirmed the deal on the company's Web site. Google purchased the handset company in 2011 for $12.5 billion. The deal would include smartphones Moto X, Moto G and DROID Ultra series, as well as some patents.
The company will pay $1.41 billion at the close of the deal, comprised of $660 million in cash and $750 million in Lenovo ordinary shares, which are subject to a share cap/floor. Lenovo will pay the remaining $1.5 billion in the form of a three-year promissory note.
"Motorola's patents have helped create a level playing field, which is good news for all Android's users and partners," Page explains in a blog post.
Page notes that it doesn't signal a larger shift for other hardware efforts. "The dynamics and maturity of the wearable and home markets, for example, are very different from that of the mobile industry," he explains. "We're excited by the opportunities to build amazing new products for users within these emerging ecosystems."
Lenovo has a history of paying high-dollar price tags for established brands. Earlier this week, it agreed to purchase IBM's server business for $2.3 billion. In 2005, the company acquired the ThinkPad PC brand and its patents from IBM.
Google will remain owner of the majority of the Motorola Mobility patent portfolio, including current patent applications and invention disclosures. As part of its ongoing relationship with Google, Lenovo will receive a license to this rich portfolio of patents and other intellectual property. In addition, Lenovo will receive over 2,000 patent assets, as well as the Motorola Mobility brand and trademark portfolio.
Credit Suisse Group advised Lenovo on the transaction; and Lazard Ltd, Google, per reports.