IBM gets go ahead for Lenovo deal

World's third largest PC maker created despite US government objections

IBM has been given the green light by the US government approval to sell its PC division to Chinese PC vendor Lenovo Group, and expects to close the deal soon.

In early January the US Federal Trade Commission established that the US$1.75 billion acquisition complied with antitrust laws.

But the deal then confronted another obstacle: The Committee on Foreign Investment in the US (CFIUS), composed of representatives from 12 agencies and chaired by the Treasury Department, decided in late January to investigate whether the Chinese government would be able to use IBM's government contacts and contracts for espionage.

Last Wednesday CFIUS delivered its decision that the merger does not threaten national security.

"We expect to close the deal in the second quarter," IBM corporate spokesman Clint Roswell says.

The deal creates the third largest PC maker in the world and is the first merger for large US and Chinese corporations. As a result of the deal Lenovo's world headquarters will move from Beijing to New York.

IBM will provide sales support through an existing sales force of approximately 30,000, and through its web site. Lenovo products will also be sold through IBM PC specialists who will join Lenovo.

IBM Global Financing and IBM Global Services will be the preferred providers to Lenovo for leasing and financing services, and for warranty and maintenance services, respectively. However, Lenovo is allowed to use the globally recognised IBM trademark for only five years. The deal will give IBM an 18.9% equity stake in Lenovo.

According to IBM, the CFIUS endorsement was the last approval needed for the merger.

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