BEIJING – Chinese computer maker Lenovo said Sunday it has completed its US$1.75 billion purchase of IBM's (search) personal computer division, creating the world's third-largest PC maker.
The deal — one of the biggest foreign acquisitions ever by a Chinese company — is expected to quadruple sales of Lenovo Group Ltd (search)., already Asia's biggest computer maker, the company said earlier.
"Within weeks, we will be introducing new products as the new Lenovo," Stephen Ward, Lenovo's chief executive officer, said in a company statement without providing specifics.
Lenovo Chairman Yang Yuanqing (search) called the purchase of International Business Machines Corp.'s personal computing division an "historic event" for the company.
The company also confirmed weeks of media speculation over whether it would raise extra cash for the massive deal.
It said three private equity investment firms — Texas Pacific Group (search), General Atlantic Group (search) and Newbridge Capital Group (search) — have agreed to take a US$350 million stake in the company. A shareholder's meeting related to that investment would be held May 13, it said.
Lenovo's shares are traded in Hong Kong, but the company has not announced any plans for other share listings overseas, raising expectations that it might find other ways to raise funds through overseas investors.
The U.S. Committee on Foreign Investment (search) had convened to investigate any national security implications of the proposed acquisition after three members of the U.S. Congress raised questions about the sale, but a review cleared it in March.
Lenovo is partially owned by the Chinese government.
Lenovo was founded in 1984 by academics at the government-backed Chinese Academy of Sciences and first worked out of a small cottage. First set up to distribute equipment made by IBM and other companies, by 1990 it was selling PCs under its own brand name.
IBM now focuses on consulting and software, outsourcing much of its manufacturing.
The sale to Lenovo is expected to cut production costs and breathe new life into the PC business, which now accounts for a small portion of IBM's total sales and profits.
IBM had 5 percent of the worldwide PC market in 2004, selling 6.8 million units, according to Gartner Inc., a U.S. technology consulting firm. That compares with 16.4 percent for Dell Inc. and 13.9 percent for Hewlett-Packard Inc., which makes the HP and Compaq brands. Lenovo ranked fifth in sales worldwide.