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International Business Machines Corp.

Lenovo Emerges as New Global PC Leader After IBM Acquisition

Strategic Insights

— 2 min read

Lenovo Group Limited and IBM today announced the closing of the acquisition of IBM's Personal Computing Division by Lenovo, creating a new international IT competitor and the third-largest personal computing company in the world. The transaction was completed ahead of schedule, with Lenovo paying IBM US$1.25 billion, comprised of approximately US$650 million in cash and US$600 million in Lenovo Group shares. Lenovo's chairman, Yuanqing Yang, stated that the company's strategy is based on delivering high-quality products and world-class service to customers, while also providing the best working environment for employees and creating value for shareholders.

Key Takeaways:

  • Lenovo has acquired IBM's Personal Computing Division, creating a new international IT competitor and the third-largest personal computing company in the world.
  • The transaction was completed ahead of schedule, with Lenovo paying IBM US$1.25 billion.
  • Lenovo's new management team will draw on the strengths of both companies, with Yuanqing Yang as chairman and Stephen M. Ward, Jr. as chief executive officer.
  • The new Lenovo will have combined annual PC revenue of approximately US$13 billion and volume of approximately 14 million units.
  • The company expects to capture synergies in procurement and marketing expenses, as well as significant medium-term synergies resulting from new market expansion and product launches, manufacturing optimization and supply-chain integration.
  • Lenovo will have combined global operations with principal offices in Purchase, New York, and Raleigh, North Carolina, and sales representation worldwide through its own locations, Lenovo Business Partners, and the alliance with IBM.
  • The new Lenovo has a broad and expanding product line encompassing mobile handsets, servers, peripherals, and digital entertainment products for the China market.

Statistics:

  • US$1.25 billion: the amount Lenovo paid to acquire IBM's Personal Computing Division
  • US$650 million: the amount of cash paid by Lenovo to IBM
  • US$600 million: the amount of Lenovo Group shares paid to IBM
  • 18.9%: the ownership of Lenovo held by IBM upon closing
  • 14 million: the volume of units Lenovo expects to have after the acquisition
  • 19,000: the number of people Lenovo employs worldwide
  • 4,400: the number of retail outlets Lenovo has in China for the consumer business
  • US$13 billion: the combined annual PC revenue of Lenovo and IBM after the acquisition

Sources:

  • [1] Business Wire, "IBM -- New global PC leader emerges -- New Lenovo board members named -- Transaction completed successfully, ahead of schedule -- New innovative products to be shipped within weeks," May 1, 2005
  • [2] Lenovo Group Limited, "Lenovo Emerges as New Global PC Leader After IBM Acquisition," May 1, 2005
  • [3] International Business Machines Corporation, "IBM and Lenovo Announce Completion of Personal Computing Division Acquisition," May 1, 2005

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