U.S. Clears IBM Sale to Lenovo
China’s Lenovo Group Ltd. won clearance from a U.S. national security oversight committee to acquire IBM Corp.’s personal computer business, the companies said Wednesday, overcoming resistance from some U.S. lawmakers.
An IBM executive said the high-level U.S. committee had given the deal its unanimous consent -- the final external approval needed -- putting the $1.25-billion PC sale on track to close in the second quarter as originally planned.
“We were able to get unanimous agreement from the members of the committee,” said Stephen Ward, the general manager of IBM’s Personal Systems Division.
Ward is to become chief executive of Lenovo once the deal closes. Lenovo is headquartered in Beijing but will move to an undisclosed site near IBM’s headquarters in Armonk, N.Y.
The merger of the IBM PC business with China’s biggest PC maker -- the first combination ever of a major U.S. company and a top Chinese one -- will create the world’s third-largest PC maker with about $12 billion in revenue and one strongly positioned in several fast-growing markets.
The deal had met unexpected resistance when some U.S. lawmakers began decrying the loss of a U.S.-based PC maker to China. In addition, some government officials, according to media reports, were concerned that Chinese nationals working for Lenovo in the United States might act as industrial spies.
Despite the review, approval of the deal had been widely anticipated on Wall Street. IBM shares rose 22 cents to $92.35 on the New York Stock Exchange.
Ward said terms of the approval were confidential, but that no compromises were required over the location of Lenovo facilities in sensitive research areas, nor were limits put on Lenovo’s ability to sell PCs to U.S. agencies.
“I don’t think we made any compromises at all,” Ward said.
Rival PC makers such as Dell Inc. and Hewlett-Packard Co. have been seeking to woo corporate PC customers away from IBM by citing the regulatory overhang as well as uncertainty over Lenovo’s future PC product strategy.
Industry experts say that underlying the cross-border combination of the two companies is a belated recognition of the fact that most PCs, including IBM’s machines, are already largely manufactured in the greater China region.
IBM plans to keep a 19% stake in Lenovo after the merger, allow Lenovo to use its PC brands for five years, and retain service, financing and support operations for PCs.
The go-ahead from the Committee on Foreign Investment in the United States was received Tuesday, Ward said.
The committee, which is composed of representatives of 11 U.S. agencies and was created in 1998 to conduct security reviews of business deals, includes members of the U.S. departments of Treasury, State, Defense, Justice and Homeland Security.
