Lenovo to Acquire IBM Personal Computing Division

Lenovo Group Limited and IBM announced a definitive agreement under which Lenovo will acquire IBM’s Personal Computing Division to form the world’s third-largest PC business, bringing IBM’s enterprise-class PC technologies to the consumer market and giving Lenovo global market reach beyond China and Asia.

Lenovo will have combined annual PC revenue of approximately US$12 billion and volume of 11.9 million units, based on 2003 business results — a fourfold increase in Lenovo’s current PC business. Lenovo’s new PC business will gain a worldwide distribution and sales network covering 160 countries, global brand recognition through the combination of IBM’s “Think” brand notebook franchise and Lenovo’s brand recognition in China, enhanced service and support for consumers and enterprise clients, and consumer strength in China. After the transaction is completed, Lenovo will provide notebook enterprise offerings, R&D and expertise in product differentiation.

As part of the transaction, the companies will enter a broad-based strategic alliance in which IBM will be the preferred services and customer financing provider to Lenovo.

Lenovo will be the preferred supplier of PCs to IBM, enabling IBM to offer several personal computing products to its enterprise and small and medium business clients.

IBM will have an 18.9 percent ownership share in Lenovo Group and is expected to recognize a gain on the sale following completion of the transaction.

While the transaction is being completed, both companies expect their existing PC operations, including customer service and product availability, to continue as usual. Following the closing of the transaction, Lenovo expects customer service and product availability will continue as usual as the two companies’ operations are integrated.

Lenovo Group will locate its PC business worldwide headquarters in New York, with principal operations in Beijing and Raleigh, North Carolina, and sales offices throughout the world.