|
|
|
|
Lenovo-IBM deal gets US security
nod
BEIJING - Lenovo Group
Ltd has won clearance from the United States'
national-security oversight committee to acquire
IBM's personal-computer (PC) business, the two
companies announced on Wednesday. This will help
the new partners overcome resistance from some US
lawmakers.
An IBM executive said the
Committee on Foreign Investments in the United
States (CFIUS) had given the deal its unanimous
consent - the final external approval needed to
close the US$1.25 billion sale of IBM's PC major
to Chinese Lenovo. "We were able to get a
unanimous agreement from the members of the
committee," Stephen Ward, general manager of IBM's
Personal Systems Division, said in a telephone
interview. Once the deal closes, Ward is to become
the chief executive of Lenovo, which is
headquartered in Beijing.
The 12-agency
CFIUS reviews purchases of US businesses by
overseas corporations for possible
national-security impact. The IBM inquiry was a
"full investigation", which occurs in less than 1%
of cross-border deals. The unusual scrutiny was a
reflection of the growing concern in some quarters
of US policymaking over China's emergence as an
economic and military behemoth.
On
December 7, Lenovo agreed to pay IBM $650 million
in cash and $600 million in stock, and assume $500
million of debt. The transaction would expand
Lenovo's PC business fourfold, giving it an annual
revenue of about $12 billion. IBM will keep 19%
stake in Lenovo after the merger, allow Lenovo to
use its PC brands for five years, and retain
service, financing and support operations for PCs.
The merger of IBM's PC business with
China's biggest PC maker - the first combination
ever of a major US corporation and a top Chinese
one - will create the world's third-largest PC
maker and one strongly positioned in several
fast-growing markets. The deal met unexpected
resistance when some US lawmakers began decrying
the loss of a US-based PC maker to China on
national security-counts. Lenovo's links with the
Chinese military only contributed to the disquiet
in Washington. A Chinese government agency will
hold a stake of just under 30% in Lenovo after the
deal is completed.
CFIUS proceedings are
kept secret. Created in 1998, the multi-agency
committee is drawn from Homeland Security,
Defense, Justice, Treasury and Commerce among
other departments. Some media reports said that to
get the clearance, IBM had to make several
commitments and concessions, which might affect
its sales and performance down the line. The New
York Times reported that Lenovo agreed to separate
American employees, mainly in the Research
Triangle Park in North Carolina, drawn from IBM
workers there who work on other products such as
larger server computers and software.
Yet
other media reports cited unnamed sources who said
that as part of the security clearance deal, IBM
and Lenovo have agreed to move 1,900 employees
from the North Carolina research facility that IBM
shares with other technology companies to another
building within the research park and also carry
out some "minor" modifications in order to enhance
the building's security. Bloomberg had last month
reported that IBM offered concessions that
included blocking Lenovo's access to the identity
of US government customers and physically sealing
off buildings in the Research Triangle Park, where
the two companies will occupy an office.
Some committee members had raised
objection to the Lenovo deal, saying the presence
of a Chinese state-owned company in such a
"sensitive" sector on US shores could result in
military-technology espionage. IBM engineers and
executives reportedly dismantled a desktop PC and
a ThinkPad notebook to explain to the committee
where the components came from and how they were
assembled, to put the members' fears at rest.
The go-ahead from CFIUS was received on
Tuesday, Ward said. He said the terms of the
approval are confidential, but that no compromises
were required over the location of Lenovo
facilities in sensitive research areas, nor were
limits put on Lenovo's ability to sell PCs to US
agencies. "Everything that CFIUS asked of us was
perfectly reasonable and the type of things that
would be in a business plan. I don't think we made
any compromises at all," Ward said. Stating that
Lenovo will be a "great corporate citizen", he
said the new Lenovo planned to move aggressively
in India and Latin America and leverage IBM's
global sales reach to grow out of China.
(Asia Pulse/XIC) |
|
|
|
|
|
|
|
 |
|
|
|
|
|
All material on this
website is copyright and may not be republished in any form without written
permission.
© Copyright 1999 - 2005 Asia Times
Online Ltd.
|
|
Head
Office: Rm 202, Hau Fook Mansion, No. 8 Hau Fook St., Kowloon, Hong
Kong
Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
|
Asian Sex Gazette China Sex News
|
|
|
