IBM which pioneered the personal-computer market more than two decades ago, agreed to sell its PC business to Chinese rival Lenovo Group Ltd. for $1.25 billion in cash and stock.
The move frees IBM from the long struggling PC business with its minimal profit margins, while vaulting Lenovo to third place in world-wide PC sales. IBM will own an 18.9% stake in Lenovo, which will open a new U.S. headquarters in New York City.
The deal marks one of the biggest acquisitions ever by a Chinese company. The purchase price is a fraction of the estimated $10 billion in sales that IBM's PC business will generate this year. Lenovo will pay IBM $650 million in cash and as much as $600 million in stock, representing 18.9% of Lenovo's equity. It also will take on $500 million in balance-sheet liabilities.
While some skeptics have questioned whether IBM's big corporate customers will want to buy PCs from little-known Lenovo, IBM pointed out that it plans to buy Lenovo PCs for its own use.
Source: WSJ
The move frees IBM from the long struggling PC business with its minimal profit margins, while vaulting Lenovo to third place in world-wide PC sales. IBM will own an 18.9% stake in Lenovo, which will open a new U.S. headquarters in New York City.
The deal marks one of the biggest acquisitions ever by a Chinese company. The purchase price is a fraction of the estimated $10 billion in sales that IBM's PC business will generate this year. Lenovo will pay IBM $650 million in cash and as much as $600 million in stock, representing 18.9% of Lenovo's equity. It also will take on $500 million in balance-sheet liabilities.
While some skeptics have questioned whether IBM's big corporate customers will want to buy PCs from little-known Lenovo, IBM pointed out that it plans to buy Lenovo PCs for its own use.
Source: WSJ
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