Google has reportedly purchased a 5.94 percent stake in China's Lenovo Group for $750 million.
Google has bought a 5.94 percent stake in the Chinese PC maker last week, reports Reuters. The web giant purchased 618.3 million Lenovo shares for $1.213 each on Jan. 30, just a day after Google announced the $2.91 billion deal to sell Motorola Mobility to Lenovo.
This shows the internet giant has completed one of the obligations in its recent Motorola-Lenovo deal. Now, Google awaits the U.S regulators' approval to complete the deal, which will likely result in the web giant having to accept certain restrictions on behalf of national security. The Committee on Foreign Investment in the United States (CFIUS) will also observe the proceedings of the deal.
"Google has entered into an agreement with Lenovo to sell Motorola Mobility to Lenovo," Lenovo spokeswoman clarified in an email statement to HNGN, Saturday, February 8. "This agreement entitles Google the right to receive equity interest upon closing of the Motorola Mobility Merger. The shares have not been issued and would only be issued at close. Google is required to disclose this contractual right to equity interest in Lenovo to the HK Exchange under their Securities and Futures Ordinance in Hong Kong."
The deal between Google and Lenovo puts an end to the web giant's participation in the smartphone race, but is still a key player as it holds some of the most important cards. Lenovo agreed to pay $660 million in cash, $750 million in stock and the rest over a three-year promissory note. As for Google, as discussed earlier, the deal does not come as a loss. The deal was to give 2,000 patents to Lenovo and secure a large chunk of patents originally obtained when it acquired Motorola in 2012.
Lenovo had a rough start since the deal was announced last week with its stock price declining 8.2 percent on the day of sale's announcement and another 14 percent Tuesday. The world's largest PC maker will have to use Motorola's recently grown popularity in phones to improve sales and make a secure mark in the industry. The Chinese electronics maker faces stiff competition from big players like Apple and Samsung, but the Motorola's mid-range smartphones like the Moto G has received a favorable response. This can be used to lure new buyers and eventually grow in the business.
Update article on 05:26 AM February 13, 2014 with a clarification statement from Lenovo spokeswoman.
