Lenovo Buys IBM Personal Computer Business

By Agence France-Presse China's largest manufacturer of personal computers, Lenovo Group, said it will pay $1.25 billion for IBM Corp.'s personal computer business, making it the world's No. 3 player in the intensely competitive field. The company will also assume about $500 million of net balance sheet liabilities from IBM, making the total deal worth $1.75 billion. The deal comprises $650 million in cash and $600 million in Lenovo shares, which gives IBM a 18.9% stake in the Hong Kong-listed Lenovo. Lenovo will fund the acquisition through internal cash and debt. The deal will allow Lenovo to use IBM's famous 'Think' brand. The company will also have the right for five years to use the IBM name, boosting its presence in a business dominated by giant U.S. manufacturers. IBM Senior Vice President and CFO John Joyce the partnership would be positive for IBM's portfolio of products and services. A joint press release said the two parties were striving for "a long-term strategic cooperation in the areas of PC sales, services and finance." The new concern will be headquartered in New York, with operation centers in Beijing and Raleigh in the United States. Copyright Agence France-Presse, 2004