Second Time’s The Charm For Lenovo’s Motorola Deal

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Lenovo’s aspirations for an established mobile handset company goes back a few years. According to a report published by the WSJ, Lenovo competed with Google for Motorola Mobility in 2011. Then just last October Lenovo submitted an offer for BlackBerry. That deal also fell through.

However, Lenovo’s search ended last Thanksgiving when Google Chairman Eric Schmidt called Yang Yuanqing, Lenovo’s chairman and chief executive, and asked if he was still interested in Motorola.

“And I said yes”, Yang told the WSJ. “This was a longtime love story.”

The story goes that Yang and Lenovo’s CFO attempted to acquire Motorola’s handset division in 2011. The pair visited company executives in Chicago. But they met with the co-CEO of the systems business, not the handset business Lenovo was after.

Google went on to purchase Motorola Mobility for $12.5 billion in 2012.

Following that purchase, Yang invited Google executive chairman Eric Schmidt over for dinner. “I told him if they really want to run a hardware business, they could keep it. If they are not interested in the hardware business, they could sell Motorola to us,” he said, according to the WSJ.

This deal is similar in nature to when Lenovo acquired IBM’s PC division in 2005. The purchase gives Lenovo access to a historic brand and a vast support network that includes engineers, manufacturing rights and a struggling, but established brand. Lenovo reportedly does not plan on laying off any of Motorola’s 3,500 employees.

In a conference call yesterday, Yang said Lenovo expects to sell 100 million handsets the year after the purchase is complete. It’s a lofty goal by any measure, but, with Lenovo’s global reach and dominance in their home country of China, a goal that is certainly obtainable.