It looks like the mobile world is in for another shakeup. Word is spreading that Google (News - Alert) is nearing a deal to sell its Motorola handset division to Lenovo for nearly $3 billion.
A source for China Daily revealed that the acquisition will include more than 10,000 mobile communications patents currently held by Google, and will likely be announced Thursday morning in Beijing.
Google first acquired Motorola (News - Alert) in 2011 for $12.5 billion, more than four times the current expected sale price. This can largely be explained by declining revenues from the cellphone giant, which has been operating more or less independently from Google over the past two-and-a-half years. Business Insider reports that Motorola revenues have shrunk from $1.78 billion in Q3 2012 to $1.18 billion in Q3 2013. Indeed, Google reported a $248 million operating loss in its Motorola Mobility segment during the same quarter.
According to Reuters, Lenovo (News - Alert) will be offering a combination of cash, stock and deferred payments in exchange for the handset division and is being advised by Credit Suisse Group. Google, meanwhile, is being advised by Lazard Ltd.
This development follows shortly after Lenovo’s announcement Tuesday to restructure into four different business groups: PC, Mobile, Enterprise, and “Ecosystem and Cloud.” The company also recently revealed plans to buy IBM’s (News - Alert) low-end server business for $2.3 billion. It thus seems clear that the Chinese PC maker is serious about expanding into other major technology markets. The company recently said its tablets and smartphones will appear in the US and European markets by 2015.
Both Google and Lenovo have remained silent on the issue. Both advisory firms declined to comment as well. However, Lenovo did reveal to China Daily that they will indeed be announcing a “major acquisition” shortly.
Further analysis is soon to come. Stay tuned for the latest coverage on the development.