AP (AP) - - China's biggest computer maker, Lenovo Group, said Wednesday it has acquired a majority stake in International Business Machines Corp. (IBM)'s personal computer business for $1.75 billion in cash and stock, in one of the biggest Chinese overseas acquisitions ever.
The acquisition would make Lenovo the third-largest PC company in the world, said Lenovo's chairman, Liu Chuanzhihe. IBM currently holds that spot.
The deal ends IBM's long transition from PC pioneer to peripheral player. Under the terms, IBM will keep an 18.5 percent stake in the company.
The combined PC revenue for the two companies in 2003 was $12 billion. The new company will have and an estimated 8 percent share of the worldwide PC market.
Lenova will take over the research and development and manufacturing of the PCs, Liu told reporters in Beijing.
Like other major Chinese manufacturers hoping to expand overseas, Lenovo is planning to leverage a well-known foreign brand name. Liu said the company would be entitled to freely use IBM's brand name in five years' time.
Stephen M. Ward, Jr., currently IBM senior vice president and general manager of IBM's Personal Systems Group, will serve as the chief executive officer of Lenovo following completion of the transaction. Yuanqing Yang, currently vice chairman, president and chief executive officer of Lenovo, will serve as the chairman of Lenovo post-transaction.
IBM executives sought to reassure jittery investors, customers and employees, emphasizing the company's focus on continuity.
"The IBM brand will gain great recognition in China, the world's fastest growing economy and the world's fastest growing market for PCs," said John Joyce, IBM senior vice president and group executive of IBM Global Services.
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