Lenovo closes IBM deal

Under the terms of the transaction, Lenovo has paid IBM US$1.25 billion, approximately US$650 million in cash and US$600 million in Lenovo Group shares, based on the closing price on the last day of trading prior to the December 2004 announcement. IBM’s ownership in Lenovo upon closing is 18.9%. In addition, Lenovo will assume approximately US$500 million of net balance sheet liabilities from IBM.

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By  Angela Prasad Published  May 2, 2005

Lenovo has closed the acquisition of IBM’s Personal Computing Division, creating a new international IT competitor. Under the terms of the transaction, Lenovo has paid IBM US$1.25 billion, approximately US$650 million in cash and US$600 million in Lenovo Group shares, based on the closing price on the last day of trading prior to the December 2004 announcement. IBM’s ownership in Lenovo upon closing is 18.9%. In addition, Lenovo will assume approximately US$500 million of net balance sheet liabilities from IBM. “The closing of this transaction is an historic event for Lenovo and marks a new era for the global PC industry,” says Yuanqing Yang, chairman of Lenovo. “The new Lenovo’s strategy is based on what our customers want: high-quality products and world-class service. We are committed to delivering the highest quality, most innovative PC products and services to our customers, to providing the best working environment for our employees, and to creating value for our shareholders.” Lenovo is well positioned, with competitive strengths in branding, world-class scale and industry-leading efficiency, says Stephen M. Ward, Jr., chief executive officer of Lenovo. “Lenovo’s leading R&D and product differentiation capabilities, experienced management team and global distribution network – through our unique alliance with IBM – give us a powerful competitive position in global markets. Within weeks, we will be introducing new products as the new Lenovo,” he adds. The company’s strengths include global brand recognition, through the combination of the “Think” brand notebook franchise and Lenovo’s leading brand recognition in China, enhanced service and support for consumers and enterprise clients and consumer strength and market leadership in China, the world’s fastest growing IT market. Lenovo has one-third of the emerging China PC market and leading shares in enterprise PC markets around the world.

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