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2009/10 Annual Report Lenovo Group Limited
144
NOTES TO THE FINANCIAL STATEMENTS (continued)
37 Business combinations
On January 31, 2010 the Group completed the acquisition of the entire interests in Lenovo Mobile Communication
Technology Ltd (“Lenovo Mobile”) under a sale and purchase agreement dated November 27, 2009.
The estimated total consideration for acquiring Lenovo Mobile is approximately HK$250 million, including cash, the
Company’s shares as consideration shares and related transaction costs.
Set forth below is the preliminary calculation of goodwill:
US$’000
Purchase consideration:
– Cash 186,146
– Direct costs relating to the acquisition 990
– Fair value of shares issued (Notes 29 and 30) 63,500
Total purchase consideration 250,636
Less: Fair value of net assets acquired (74,084)
Goodwill (Note 17(a)) 176,552
The major components of assets and liabilities arising from the acquisition are as follows:
Fair value Carrying value
US$’000 US$’000
Cash and cash equivalents 80,432 80,432
Secured bank balances 28,330 28,330
Property, plant and equipment (Note 14(a)) 16,720 17,693
Other non-current assets 12,472 12,472
Intangible assets (Note 17(a)) 18,268 1,624
Net working capital except cash and cash equivalents and secured bank balances (76,476) (76,476)
Non-current liabilities (5,662) (5,662)
Net assets acquired 74,084 58,413
US$’000
Purchase consideration settled in cash 186,146
Direct costs relating to the acquisition 990
Less: Cash and cash equivalents in subsidiaries acquired (80,432)
Acquisition of subsidiaries, net of cash acquired 106,704
The goodwill is primarily attributable to the significant synergies expected to arise in connection with the development of
the mobile internet device business of the Group.
Intangible assets acquired are expected to be amortized over their useful lives of 3 years.
The acquired tangible assets primarily comprised trade receivables, inventories and plant and equipment. The liabilities
assumed primarily comprised trade payables and other current and non-current liabilities.
The sale and purchase agreement contains provisions that may require miscellaneous adjustments to be agreed between
the Company and seller. Such adjustments have not been finalized, but estimates have been recorded as part of the
purchase price allocation, as indicated above. This process is expected to be finalized in the financial year 2010/11.