NEW YORK ? The IBM PC division, which during the 1980s consolidated a very fragmented personal computer marketplace, is now primarily owned by China?s Lenovo Group. The $1.75 billion purchase, creating the world?s third-largest PC maker, closed Sunday.
IBM retains an 18.9 percent stake in Lenovo, which paid $1.25 billion in cash and assumed $500 million in debt. The joint venture trails only Dell and Hewlett-Packard in sales. Security concerns raised by the Committee on Foreign Investments in the United States were ignored by the Federal Trade Commission, which said the sale would not effect competition in the marketplace.
“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 an “historic event” for the company.
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 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. IBM has promised to support the PC maker with marketing and via its IBM corporate sales force.
The deal, which was announced in December 2004, has come under regulatory scrutiny over national security concerns. 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.
The combined venture will have roughly 10,000 IBM employees and 9,200 Lenovo employees. It will be headquartered in New York, with operations in Beijing and in Raleigh, N.C.
