Google Inc, the world's top search engine and the Android platform developer, has spent US$750 million in a bid to acquire 5.94 percent of shares from Lenovo Group Ltd., one of China's leading tech companies, according to Google's report to Hong Kong Exchanges and Clearing Ltd. (HKEx) on Thursday.
The acquisition of shares from lenovo can only be validated once Lenovo has completed its buyout of Motorola Mobility from Google. [Xinhua]
However, the deal can only be validated once Lenovo has completed its buyout of Motorola Mobility from Google, Lenovo authorities announced yesterday (Feb. 7).
Google purchased 618.3 million shares of Lenovo, priced at US$1.213 each, on Jan. 30. The Lenovo authorities added that those shares belong to Lenovo's purchase of Motorola Mobility and Google's deal should therefore only come after the completion of Lenovo's buyout.
Lenovo announced on Jan. 30 that it would acquire Motorola Mobility from Google for the total sum of US$2.9 billion, consisting of a timely pay of US$660 million in cash, US$750 million in Lenovo shares and a three-year promissory note worth US$1.5 billion.
Lenovo's stock price tumbled by 8.21 percent right on the day when the company announced its buyout of Motorola Mobility. It continued to slip a further 16.4 percent on Feb. 7, the first trading day after the seven-day Chinese New Year holiday. Losses totaled around some 26.5 billion HK dollars (US$3.42 billion) in market value over the course of merely two days.
Yang Yuanqing, chairman of the Lenovo board, said at a press conference held on Jan. 30 that Google is more interested in Lenovo's stock, which is expected to go up in value.
Google is expected to become the third largest share holder following Legend Holdings, which controls 33.59 percent of Lenovo shares, and Yang (who owns 7.93 percent) in Lenovo Group Ltd. when the deal is finalized.
It is the second time for Lenovo to introduce a share holder due to an overseas purchase. In 2004, IBM Co. became Lenovo's second largest share holder by acquiring a 18.9 percent stake in the company. However, it sold its shares and withdrew from Lenovo's business two years later.
According to a Beijing News analysis, Google is aligning itself with Lenovo in a bid to compete with Samsung, the top smart phone provider using the Android platform. Meanwhile, Lenovo, now Google's topnotch client, can also benefit from the purchase by enjoying more privileges, such as patent rights, on the Android platform for its smart phones.