Wednesday, December 08, 2004

Lenovo (Legend) buys IBM PC unit

Lenovo, the largest PC maker in China, paid $1.25B (about equal amounts of cash and stock) for IBM's PC unit. Lenovo's market cap is about $3B so this amounts to a 19% stake for IBM in Lenovo. For those non-geeks out there, the IBM Thinkpad was long regarded as the best Windows laptop line.

Lenovo, originally known as Legend, had its origins in the Chinese Academy of Science. This acquisition vaults it to no.3 in the world in PCs (after Dell and HP) with a 9% world market share. Integration of the IBM unit should prove quite challenging. However, it does provide Lenovo with key ingredients that even leading Chinese companies have thus far lacked: a recognized brand, sophisticated product design and worldwide distribution.

Earlier I noted that both Schwinn (bicycles) and RCA (electronics) brands were now in the hands of Chinese companies.

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