Lenovo completes acquisition of IBM unit for US$1.75bn

LANDMARK DEAL: The two tech giants put the finishing touches on a deal that will create the world's third-largest computing company

AFP , BEIJING

Mon, May 02, 2005 - Page 10

China's largest computer maker Lenovo Group Ltd (聯想) and International Business Machines Corp of the US said yesterday they had completed a deal to create the third-largest computing company in the world.

Under the US$1.75 billion deal, which shocked the world when first announced late last year, Lenovo has acquired IBM's Personal Computing Division.

Observers have characterized it as the most dramatic example yet of Chinese companies' expansion abroad, a herald of what the world can expect from a revitalized China in the years and decades ahead.

"The closing of this transaction is a historic event for Lenovo and marks a new era for the global PC industry," Lenovo chairman Yang Yuanqing (楊元慶) said in a statement.

"The new Lenovo's strategy is based on what our customers want: high-quality products and world-class service," he said.

Stephen Ward, chief executive officer of Lenovo, said the newly-created giant would be introducing new products "within weeks."

Lenovo will manufacture PCs for the global market with the IBM name under the deal signed last year, gaining some clout in competing with sector leaders Dell Inc and Hewlett-Packard Co.

The US$1.75 billion Lenovo paid for the acquisition includes US$650 million in cash and US$600 million in Lenovo shares. It has also agreed to assume half a billion dollars of IBM liabilities.

The deal shows not just corporate China's ever more aggressive acquisition strategies, but also its determination to step onto the global stage.

The executive headquarters of the new expanded Lenovo is in Purchase, New York, but the company will employ a total of 19,000 people worldwide, according to the statement.

"Lenovo is well-positioned, with competitive strengths," Ward said.