Google purchases Lenovo stake

<p>Google has bought six per cent of Lenovo.</p>

Google's partnership with PC manufacturer Lenovo has stepped up a gear after the company announced it has bought a six per cent stake in the firm.

Having sold handset-maker Motorola Mobility to Lenovo recently, Google acquired 618.3 million Lenovo shares priced at $1.21 each at the end of last month.

A stock exchange filing revealed that $750 million (£459 million) was therefore spent by Google on the shares in Lenovo, which has become the world's largest PC manufacturer over the course of the last few years.

Lenovo shares rose by over one per cent on the back of the news of Google's massive investment in the company, which could be taken by investors as a sign the two firms could start working together on new products in the future.

Google first began as a search engine company and while most of its income still comes from advertising, it has been branching out in recent months and has had particularly high levels of success with its moves into the smartphone market, with its Android operating system becoming a major rival for Apple's iOS system.

Rise and fall

Lenovo stocks dropped heavily after it was announced it had bought handset-maker Motorola Mobility from Google, with the firm having lost 24 per cent of its market value since the $2.91 billion deal was agreed at the end of last month, reports BBC News.

Investors will now be looking ahead to the release of the latest financial results by Lenovo, which are scheduled to be announced next week (February 13th). The statement could include details of the firm's new partnership with Google, which is likely to be solidified as a result of the search company's investment in the PC manufacturer.

Google stocks were up by almost 1.5 per cent in trading yesterday (February 6th) in the US and rose again in after-hours trading on the Nasdaq after news of its six per cent stake in Lenovo was released via the media. During the after-hours session, the share price of Google rose by a further 0.15 per cent.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.