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Lenovo Completes Acquisition Of Motorola

Research Triangle Park, N.C. — Computer, tablet and smartphone maker Lenovo completed its acquisition of Motorola Mobility from Google and will operate Motorola as a wholly owned subsidiary whose headquarters will remain in Chicago.

With the acquisition, Lenovo said it becomes the world’s third-largest maker of smartphones, and it gives the Chinese company its first foothold in the U.S. smartphone market.

Lenovo reiterated that it expects to make Motorola profitable in four to six quarters.

The acquisition will combine Lenovo’s global scale and “proven operational excellence” with Motorola’s presence in the U.S. and other mature markets, carrier relationships, and brand name, said Lenovo chairman/CEO Yang Yuanqing.

The acquisition will build “a strong number three and a credible challenger to the top two in smartphones,” the chairman continued, and it “will give the market something it has needed: choice, competition and a new spark of innovation.”

Liu Jun, VP/president of Lenovo’s mobile business group, said that with the acquisition, Lenovo has “very aggressive plans to ramp up our [smartphone] business around the world.”

In comments during a conference call with analysts and the press, executives spoke to their short- and mid-term branding strategies, saying mature markets such as the U.S., Western Europe, Japan and Australia will get the Motorola brand exclusively. In emerging markets, however, the company will pursue a dual-brand strategy, offering smartphones under both brands.

Executives also said they expect to improve Motorola’s competitiveness through Lenovo’s procurement efficiencies, enabling Motorola to improve sales in emerging markets.

Liu Jun, VP/president of Lenovo’s mobile business group, said the two companies combined expect to sell more than 100 million mobile devices this year — including smartphones and tablets — by leveraging the Lenovo brand’s market position in China, “shared momentum” in emerging markets, and Motorola’s “strong foothold” in mature markets like the U.S.”

Motorola president/COO Rick Osterloh said pointed out that Motorola does business in 45 countries while Lenovo’s reach is global. As a result, Motorola has an opportunity to sell through Lenovo channels and vice versa. He called that potential “perhaps the most exciting synergy” resulting from the acquisition.

The acquisition also provides” quite a big opportunity for broader distribution of Lenovo tablets.” Motorola no longer sells Motorola-brand tablets.

With the closing of the deal, Liu Jun becomes chairman of the Motorola management board, and Osterloh remains Motorola’s president/COO.

Although Google will maintain ownership of most of the Motorola Mobility patent portfolio, Motorola will get a license to the patents and other intellectual property. Motorola will keep more than 2,000 patent assets and a large number of patent cross-license agreements as well as the Motorola Mobility brand and trademark portfolio, the companies said.

Motorola employs almost 3,500 people, about 2,800 of them in the U.S.

The total purchase price was about $2.91 billion.