IBM to take 5% of Lenovo to seal PC biz deal

IBM to take 5% of Lenovo to seal PC biz deal - report

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By Tony Smith • Get more from this author

Posted in Financial News, 7th December 2004 10:13 GMT

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Lenovo looks set to pay $1.5bn in cash and shares for IBM's Personal Systems Group (PSG) in a deal that would see IBM gain a five per cent share in the Chinese company.

With an announcement coming potentially as early as tomorrow - discussions between the two companies seem to be as an "advanced" stage, as the Financial Times puts it today.

Certainly, Lenovo will make some kind of announcement. Trading in its shares,on the Hong Kong exchange was suspended yesterday at HKD2.675 ($0.34). That would value a possible five per cent stake in the business at HKD1bn ($128.7m).

While reports coming out of Asia-Pacific point to some kind of JV between the two companies, in the West the emphasis continues to centre on Lenovo's acquisition of PSG and with it the famous 'Think' brand and usage of the IBM name.

However, talk of a full-scale buyout appears to be mellowing in favour of a sale that would leave IBM with a stake in the purchaser. Crucially, this would enable IBM to claim it is maintaining an interest in the PC industry with which it has been inextricably linked.

Meanwhile, a number of US buy-out operations have been rumoured to be taking a look at PSG. ®