Businesspassagereading
VI. Business Passage Reading.
Lenovo clears final hurdle in IBM acquisition
US committee approves US$1.75b deal after investigation into security matters
gACQUISITIONS
Michael Logan
A United States government committee has approved IBM’s sale of its personal computer business to Beijing-based Lenovo Group, concluding an investigation into national security matters that had threatened to scupper the US$1.75 billion deal.
The two companies said yesterday the Committee on Foreign Investment had consented to the transaction, about a week before its decision was due.
Earlier reports indicated that US officials were concerned about an IBM facility in North Carolina could be used as a base by Lenovo employees to engage in industrial espionage.
They also expressed worries about Lenovo filling computer orders on behalf of the US government, an important IBM client.
Lenovo executives would not say what concessions were offered to assure committee officials, but added none was made that would restrict the company’s ability to do business in the US.
“I really cannot give you the details of the terms because this is sort of a private agreement,” chief financial officer Mary Ma Xuezheng said.
“There’s nothing that will disable us [from] normal business after the transaction, including with the US government.”
Ms Ma also brushed off mainland media reports that four banks participating in a US$600 million loan to finance the transaction were having second thoughts.
“It’s going on and will be completed in a few weeks,” she said.
Executives from both companies will now turn their attention to separating the computer unit from IBM and integrating it into Lenovo’s operations.
The companies hope to finalise the deal by the end of the second quarter.
“The first priority is to keep the customer loyalty,” Ms Ma said, reiterating that fewer than 10 per cent of customers were unhappy with the deal.
However, the computer sector has changed dramatically since Lenovo first announced the deal in January - at least in terms of the industry’s leadership.
Last month, Carly Fiorina was forced to resign as chief executive of Hewlett-Packard, largely because of perceptions the company’s purchase of Compaq Computer had not worked.
Ms Ma sought to highlight the differences between the Levono-IBM deal and the HP-Compaq merger. Lenovo does most of its business on the mainland, but after the transaction 70 per cent of its revenue will come from global markets.
“We really don’t have that much overlap. This is different from their transaction,” she said. “The synergy will be more easily obtained.”
“We have a very high level of confidence. In a few quarters, you will be able to tell whether this transaction is accretive or dilutive.”
scupper verb [transitive] British English
1 to ruin someone’s plans or chance of being successful - used especially in news reports American Equivalent: scuttle 突袭并消灭，使伤残，打败
Plans to build a private hospital have been scuppered after a government inquiry.
2 to deliberately sink your own ship
consent verb [intransitive]
to give your permission for something or agree to do something
consent to
Her father reluctantly consented to the marriage.
consent to do something
He rarely consents to do interviews.
