Lenovo to seal IBM deal in Q2

HONG KONG: Lenovo Group Ltd., China's biggest PC maker, said that a U.S. security review of its $1.25 billion purchase of IBM's PC unit is a standard procedure, and it still aims to complete the deal by June.

The acquisition by Lenovo has been cast into doubt after some U.S. lawmakers warned the sale could threaten security interests.

"The acquisition is going on as expected. We have not received any message from the American government that they will not approve the deal," said Lenovo Chief Executive Yang Yuanqing, after 99.47 percent of Lenovo's shareholders voted to approve the deal at special stockholders' meeting.

"I don't think that (personal computers) will cause any threat to U.S. national security," Yang added.

U.S. antitrust officials have already given their approval to the landmark sale. But the U.S Committee on Foreign Investment in the United States (CFIUS), an administration panel of security and economic agencies headed by Treasury Secretary John Snow, must also sign off on the deal.

CFIUS is charged with examining national security aspects of U.S. corporate asset sales to foreign buyers. It is expected to decide by the end of January whether to extend a 30-day review of the IBM sale for 45 more days.

If CFIUS launches the extended review, it would send its recommendations to President George W. Bush to make the final decision. Bush then would have 15 days to decide what action to take, according to a Treasury Department web site.

A trio of Republican committee chairmen led by Duncan Hunter, chairman of the House armed services committee, called for a full security review of the sale, saying that it could result in the transfer of U.S. military-related technologies to Beijing.

Bill Reinsch, president of the National Foreign Trade Council, a leading industry group, said national security concerns about the sale were overstated.

"This is not a highly classified project or acquisition that we're talking about. This is a widely-used ubiquitous technology," Reinsch said earlier this week.

Reinsch, who oversaw U.S. export controls on high-tech products as a undersecretary of Commerce during the Clinton administration, said CFIUS representatives from the Department of Homeland Security seem to have the most concerns.

In 2003, U.S. regulators stopped a bid by Hong Kong-based Hutchison Whampoa to buy the then-bankrupt telecommunications company Global Crossing. In 1999, they also blocked a US$450 million satellite sale to a Chinese-led consortium over similar concerns.

Shares in Lenovo jumped about 4 percent on Monday after a news report that the deal faced a potential hurdle.

Yang stressed that the deal will create synergy. He revealed that the revenue of IBM's personal computer unit increased 12 percent in 2004 and generated a net profit of $92 million in the last quarter of 2004, or $83 million more than that of the fourth quarter in 2003.