[photopress:lenovo.jpg,full,alignright]On December 7, 2004 it was announced that IBM would sell its PC division to Lenovo and take a minority stake in the former rival.
The plan was that the two companies would form a complex joint venture that would make Lenovo the third-largest PC maker in the world, behind Dell and Hewlett-Packard, but still give IBM a hand in the PC business.
Lenovo is said to have paid roughly US$650 million in cash and US$600 million in securities. At that time the joint venture was working on the basis of an annual sales volume of 11.9 million units and revenue of US$12 billion. 2005 looked as if it would be a great year.
Now IBM is selling part of its stake in Lenovo and this has led to a temporary suspension of sales of Lenovo in Hong Kong.
Lenovo spokeswoman Angela Lee said IBM had informed the company it planned to sell a large block of shares but had not provided specific details of the transaction.
She said, ‘The trading of Lenovo’s shares has been suspended at our request, pending the release of an announcement … relating to the placing of Lenovo’s shares by IBM.’
The story is that IBM sold 300 million shares in Lenovo Group in a sale worth HK$960 million. In truth IBM has gradually reduced its stake in Lenovo since that deal so a further sale of shares would be in keeping with the company’s stated plan to sell down its stake in Lenovo.
Prior to the sale, IBM had a 13.2% stake in Lenovo. The sale of shares will reduce IBM’s holdings to 9.7%.
Does this mean that IBM no longer looks on Lenovo fondly? Not at all. Lenovo Tuesday announced the signing of a five-year agreement for IBM to provide technical support, installation, deployment and other PC-related services to its customers. The deal could be worth up to US$245 million to IBM. That does not sound like a friendship turned sour.
The shares at the time of the original deal were worth 38 cents each. News reports suggest that IBM is now getting 42 cents for each share.
Source: ITWorld and research.
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