Lenovo completes acquisition of IBM’s PC unit

Lenovo Group Ltd. announced Sunday that its acquisition of IBM Corp.’s PC unit has been completed, saying the process was finished ahead of schedule.

With the completion of the US$1.75 billion deal — expected to happen before the end of the second quarter, on June 30 — Lenovo has become a much larger company and has more than quadrupled its annual revenue. The company, which had just under US$3 billion in annual revenue before the acquisition, now has annual revenue of around US$13 billion and is the world’s third-largest PC vendor, behind Dell Inc. and Hewlett-Packard Co.

With the acquisition behind it, Lenovo is promising immediate results. In a statement, the company said it expects to see lower procurement and marketing costs. Lenovo also promised a wave of new product introductions to come in the coming weeks. Those announcements could include the introduction of Lenovo-brand products into markets outside China.

What Lenovo’s US$1.75 billion acquisition of IBM’s PC unit means:

  • Annual revenue of US$13 billion
  • Now the third largest PC vendor
  • Lenovo brand distribution outside China
  • Lower procurement and marketing costs for the company

Prior to the acquisition, very few of Lenovo’s products were sold outside mainland China.

However, on Lenovo’s newly revamped Web site for the U.S., the company has put up information on a Lenovo-brand consumer desktop, notebook and a smart phone based on software from Microsoft Corp. The site noted the products are currently available only in China, but graphics of the smart phone showed it running English-language software.

Upcoming product introductions could also include a version of the ThinkPad X41 notebook with a rotating screen that can be folded back against the keyboard, allowing it to be used as a tablet computer.

Documents describing the notebook, called the ThinkPad X41 Tablet Series, were recently made available on the Web site of the U.S. Federal Communications Commission (FCC). The FCC’s approval is required before any device that includes a radio, including wireless LAN connectivity, can be offered for sale in the U.S. Lenovo executives could not immediately be reached for comment.

With the completion of the deal, Lenovo has officially moved its headquarters from Beijing, where the company was established as a spin-off from the Chinese Academy of Sciences, to Purchase, New York.

Lenovo also announced that IBM has named Henry Chow, the general manager of IBM China, and Robert W. Moffat Jr., an IBM senior vice president, as its representatives on Lenovo’s board of directors. Both Chow and Moffat will act as non-voting observers, according to Lenovo.

Related links:

China’s Lenovo to buy IBM’s PC business

Here’s why IBM’s PC sale to Lenovo makes sense

Lenovo’s IBM deal to face US review

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Jim Love, Chief Content Officer, IT World Canada

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