Chinese Computer Maker Buys IBM PC Business

Chinese computer maker Lenovo Group said Wednesday it will take over IBM’s personal computer business, creating the world’s third-largest PC maker in a $1.75 billion deal that announces China’s ambitions to become a key player in the global industry.
The deal — one of the biggest foreign acquisitions ever by a Chinese company — was expected to quadruple sales of Lenovo, already Asia’s biggest computer maker, the companies said.
It also extends IBM’s long-running transition from leader and innovator in computer hardware to a dominant force in computer services, software and consulting. Lenovo, formerly known as Legend, joins a wave of Chinese firms with aggressive plans to expand abroad.
‘‘This acquisition will allow Chinese industry to make significant inroads on its path to globalization,’’ Lenovo chairman Liu Chuanzhi said at a news conference. ‘‘It has changed the structure of the global PC manufacturing business.’’
Lenovo will take over IBM’s desktop PC business, including research, development and manufacturing for $1.25 billion in cash and shares, while IBM will retain a 18.9 percent stake, Liu said.
Lenovo also agreed to take on liabilities that raise the total value of the deal for IBM to $1.75 billion. The Chinese company will be allowed to use IBM’s brand name under a licensing agreement, Liu said. The companies appear to have structured the deal to ensure that IBM still has a say in the PC business, despite its small stake. Lenovo Group’s worldwide PC business will move its headquarters to New York.
Lenovo was founded in 1984 by academics at the government-backed Chinese Academy of Sciences and first worked out of a small cottage. Initially set up to distribute equipment made by IBM and other companies, by 1990 it was selling PCs under its own brand name.

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