Lenovo buys IBM PC biz for $1.25 b

NEW DELHI: China's largest personal computer maker, Lenovo Group Ltd has signed a definitive agreement with IBM to acquire the U.S. based IT giant's personal computing division for $1.25 billion in cash and stock, in one of the biggest Chinese overseas acquisitions ever.

The complex acquisition, which would be completed in the second quarter of 2005, would make Lenovo the third-largest PC maker in the world, behind Dell and Hewlett-Packard.

According to the agreement, while Lenovo will pay $1.25 billion for the IBM PC unit and assume $500 million in net balance sheet liabilities from IBM debt taking the cost to $1.75 billion, IBM will take an 18.9 percent stake in Lenovo. The Chinese major will pay roughly $650 million in cash and $600 million in securities. The joint venture is expected to ship around 12 million units based on 2003 numbers and have annual revenue from PC sales of $12 billion.

Besides, Lenovo will also be the preferred supplier of PCs to IBM and will be allowed to use the IBM brand, including its 'Think' brand for five years.