Lenovo Group to acquire IBM personal computing division

Manufacturing News, Source : TheManufacturer.com
Published : 08 Dec 2004 15:48

Chinese personal computer manufacturer Lenovo Group and US PC maker IBM announced an agreement under which Lenovo will acquire IBM's PC division to form the world's third-largest PC business.

IBM will receive at least $650 million in cash and up to $600 million in Lenovo Group common stock. IBM will be Lenovo's second-largest shareholder, with an 18.9 percent interest in Lenovo. Lenovo will assume approximately $500 million of net balance sheet liabilities from IBM. The transaction is expected to be completed in the second quarter of 2005.

Lenovo will have combined annual PC revenue of approximately $12 billion and volume of 11.9 million units, a fourfold increase from Lenovo's current PC business.

Stephen M. Ward Jr., currently IBM senior vice president and general manager of IBM's Personal Systems Group, will serve as the CEO of Lenovo. Yuanqing Yang, currently vice chairman, president and CEO of Lenovo, will serve as Lenovo’s chairman.

Lenovo will locate its PC business worldwide headquarters in New York, with principal operations in Beijing, China, and Raleigh, NC, and sales offices throughout the world. Upon completion of the transaction, the company will have approximately 19,000 employees. Approximately 10,000 current IBM employees, more than 40 percent of whom already are in China, will join Lenovo. The transaction is expected to have minimal impact on employment, benefits and compensation in either company.

Founded in 1984, Lenovo was the first company to introduce the home computer concept in China, and since 1997 has been the leading PC brand in China and across Asia with annual revenues of approximately $3 billion. IBM's PC business generated over $9 billion in revenues in 2003, and the company was a pioneer in the PC industry in 1981.

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