| April/May
2005 Updates China's Lenovo
completes takeover of IBM's PC business
By
Chin Saik Yoon in Penang, Malaysia, May 2005. China's
Lenovo Group Limited and IBM made a joint statement on 1 May 2005 confirming that
Lenovo has completed its acquisition of IBM's PC business. Lenovo is China's leading
PC brand. It has become the world's third largest PC business through this takeover
with estimated combined annual PC revenue of approximately US$12 billion and volume
of 11.9 million units based on 2003 business results. Lenovo's PC business will
benefit from IBM's worldwide distribution and sales network covering 160 countries
and its well known global brand "Think" brand. IBM in turn has acquired
18.9 percent ownership of Lenovo Group shares through the deal.
According
to an IBM press
release on 7 December 2004, IBM received at least US$650 million in cash and
up to US$600 million in Lenovo Group common stock, subject to a lock-up period
expiring periodically over three years. IBM is now Lenovo's second-largest shareholder.
Additionally, Lenovo assumed approximately US$500 million of net balance sheet
liabilities from IBM. Lenovo funded the cash portion of the deal through internal
cash and debt.
The PC manufacturing portion of the International Information
Products Company in Shenzhen (IIPC), China, which is co-owned by IBM and Great
Wall, is included in the transaction, however, IIPC's IBM eServer xSeries manufactured
at this plant is excluded from the transaction.
Lenovo will be shifting
its headquarters from Beijing to New York. Stephen M. Ward, Jr., the former IBM
senior vice president and general manager of IBM's Personal Systems Group, has
been appointed as the chief executive officer of Lenovo. Yuanqing Yang, the vice
chairman, president and chief executive officer of Lenovo, has assumed the chairmanship
of the group.
The deal was kept pending from December 2004 by a review
of the Committee on Foreign Investments in the U.S. (CFIUS). Lenovo announced
in a press
statement three months later on 9 March 2005 that the CFIUS review was complete.
This cleared the way for the two companies to complete the deal. The CFIUS review
was concluded in advance of the statutory deadline.
|
2003/2004 edition 
2005/2006 edition