Lenovo, China's largest computer maker, has entered into an agreement to buy IBM's personal computer division in a $1.75 billion deal - the largest ever overseas acquisition by a Chinese technology company. The transaction will see Lenovo give IBM at least $650 million in cash, funded through internal cash and debt. In addition, IBM will receive up to $600 million in Lenovo common stock at HK$2.675 ($0.34) per share.
When the deal is completed IBM will have an 18.9% stake in Lenovo, making it the company's second largest shareholder.
Lenovo will also assume approximately $500 million of net balance sheet liabilities from IBM.
Stephen Ward, general manager of IBM's personal systems group, said: ?Our two companies are a perfect fit sharing a common cultural commitment to innovation, customer service and shareholder value.?
?Looking forward, Lenovo will pursue an aggressive yet prudent growth strategy,? he adds.
Lenovo was founded in 1984 and was the first company to introduce home computers to the People's Republic of China. Since 1997 it has had annual revenues of approximately $3 billion.
IBM is receiving financial advice from Merrill Lynch, while Lenovo is being advised by Goldman Sachs.