May 1, 2005 11:15 AM PDT

Lenovo completes buy of IBM's PC business

China's Lenovo Group has completed its $1.75 billion purchase of IBM's PC division, creating the world's third-largest PC maker, the companies said Sunday.

"Within weeks, we will be introducing new products as the new Lenovo," Stephen Ward, Lenovo's chief executive officer, said in a statement.

Lenovo Chairman Yang Yuanqing called the purchase a "historic event" for the company.

Under the deal, IBM takes an 18.9 percent stake in Lenovo. Lenovo paid $1.25 billion for the IBM PC unit and assumed debt, which brought the total cost to $1.75 billion.

Based on both companies' 2003 sales figures, the joint venture will have an annual sales volume of 11.9 million units and revenue of $12 billion, increasing Lenovo's current PC business fourfold. Lenovo trails only Dell and Hewlett-Packard in sales.

Lenovo will be the preferred supplier of PCs to IBM and will be allowed to use the IBM brand for five years under an agreement that includes the "Think" brand. Big Blue has promised to support the PC maker with marketing via its corporate sales force.

The deal, which was announced in December 2004, has come under regulatory scrutiny. The Committee on Foreign Investments in the United States, which reviews acquisitions of U.S. businesses by companies based outside the country, has reportedly showed concern that Chinese operatives might use an IBM facility for industrial espionage.

However, the Federal Trade Commission indicated in January that it would not raise any objections to the Lenovo deal on the basis of how the sale might affect competition in the market.

The combined venture will have roughly 10,000 IBM employees and 9,200 Lenovo employees. It will be based in New York, with operations in Beijing and in Raleigh, N.C.

5 comments

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The title reads like Lenovo just bought IBM instead of just their PC biz
Where are the editors for this site? First the one about Bill Gates wanting to scrap H1-B visas, which clearly misrepresented what he was saying and now Lenovo buying IBM... Not impressive.
Posted by (3 comments )
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Headline looked ok to me.
IBM's PC business is just a small portion of IBM's overall assets. They still have a small intrest in the buyers business as well. I don't believe that this sale included the server technology side either. So I would say the Headline was accurate or at least pretty close.
Posted by System Tyrant (1453 comments )
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Microsoft's Windows OS Dominance!
With Microsoft's Windows Operating System being the dominant OS worldwide with over 90% of the PC market share it will be quite interesting to see how companies (Dell, Hewlett-Packard, Lenovo...) involved in the PC businesses will perform; also, moving forward, how the adoption of the "64-bit" version of Windows and other operating systems will reshape the worldwide PC marketplace; all this, in addition to the degree of penetration of the Open Source products which comes with SLAs that can influence the TCOs one way or the other!
Posted by (187 comments )
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Lenovo and Linux!
Lenovo is a little more Linux friendly than some of the other PC
makers and it will be interesting to see how this will shape up in
the US market. With IBM pushing its Linux strategy into high
gear while also having a minor stake in Lenovo should bring
some needed tech flavor to the computer industry in the near
future.
Posted by JuggerNaut (860 comments )
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