IBM to take 5% of Lenovo to seal PC biz deal

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Lenovo is set to pay $1.5bn in cash and shares for IBM's Personal Systems Group (PSG) in a deal that would see Big Blue gain a five per cent share in the Chinese company.

With an announcement coming potentially as early as tomorrow - as we reported yesterday - discussions between the two companies would certainly seem to be as an "advanced" stage, as the Financial Times puts it today.

While reports coming out of Asia-Pacific point to some kind of JV between the two companies, in the West the emphasis continues to centre on Lenovo's acquisition of PSG and with it the famous 'Think' brand and almost certainly crucial usage of the IBM name.

However, talk of a full-scale buyout appears to be mellowing in favour of a sale that would leave IBM with a stake in the purchaser. Crucially, that would allow IBM to claim it is maintaining an interest in the PC industry with which it is inextricably linked.

Meanwhile, a number of US buy-out operations have been rumoured to be taking a look at PSG, though a number of those claimed to be engaged in such explorations have said they are not interested in IBM's PC business.

Certainly, Lenovo is about to make some kind of announcement. Trading in its shares, which are bought and sold on the Hong Kong exchange, were suspended yesterday at HKD2.675 ($0.34). That would value a possible five per cent stake in the business at HKD1bn ($128.7m). ®

http://www.theregister.co.uk/2004/12...lenovo_update/