[Excerpt: Officials also were concerned that an IBM facility in Research Triangle Park, North Carolina, could be used by Chinese operatives to engage in industrial espionage, the people said. Lenovo will occupy some of the buildings in the park after the transaction.....Lenovo is controlled by Legend Group, which was established in 1984 by the Chinese Academy of Sciences, a government institution.]
http://www.bloomberg.com/apps/news?pid=10000087&sid=aruxhczR_UJw&refer=top_world_news Lenovo's Purchase of IBM PC Unit Wins U.S. Clearance (Update4) March 9 (Bloomberg) -- Lenovo Group Ltd., China's largest personal computer maker, won U.S. government clearance for its $1.25 billion purchase of International Business Machines Corp.'s PC unit, overcoming national security concerns. IBM last month offered concessions that included blocking Lenovo's access to the identity of U.S. government customers and physically sealing off buildings in an office park the two companies will occupy after the sale. U.S. officials had demanded the measures to limit the threat of industrial espionage. The purchase, which will make Beijing-based Lenovo the world's third-largest PC maker, is now likely to be completed in the second quarter, Stephen Ward, general manager of IBM's personal systems group, said in a statement today. The deal allows Armonk, New York-based IBM to jettison a money-losing business and gives Lenovo a foothold in the U.S. PC market. ``It's common sense we protect ourselves before we allow the sale to go through,'' said Richard Williams, an analyst at Garban Institutional Equities in Jersey City, New Jersey, who rates IBM ``sell'' and said he doesn't own the shares. ``This should be a benefit to IBM stock by removing a low-margin business.'' IBM shares, down 6.5 percent this year, rose 66 cents to $92.79 at 11 a.m. in New York Stock Exchange composite trading. The Committee on Foreign Investment in the U.S., a 12-agency committee chaired by the Treasury Department, decided Jan. 27 to begin a formal investigation after an initial review raised security concerns and Republican chairmen of three congressional committees urged the Bush administration to lengthen the probe. Today's approval came before a 45-day review period was scheduled to end March 14. Tony Fratto, a spokesman for the Treasury Department, didn't immediately reply to a request for comment. Fourfold Expansion Lenovo will be a ``great corporate citizen,'' said Ward, who will become chief executive of the U.S. business. On Dec. 7, Lenovo agreed to pay IBM $650 million in cash and $600 million in stock, and assume $500 million of debt. The transaction would expand Lenovo's PC business fourfold, giving it annual revenue of about $12 billion and making it the biggest U.S. PC seller behind Round Rock, Texas-based Dell Inc. and Palo Alto, California-based Hewlett-Packard Co. The Chinese company also would gain the rights to use IBM's brand for five years and a distribution and sales network covering 160 countries. IBM will be a reseller of the PCs under the purchase agreement. ``The benefit of scale and scope, the increased market, so much outweigh a marginal loss of customers'' incurred through national security concerns, said Lehman Brothers analyst Harry Blount, who is based in San Francisco, rates IBM ``equal weight/neutral'' and said he doesn't own the shares. ``For IBM it's a win because they get a strong partner in the China market.'' Government Customers Because IBM is approved as a computer vendor by the U.S. General Services Administration, Lenovo gains the U.S. government as a customer. That access concerned members of the committee from the Department of Homeland Security and the Justice Department, who demanded that IBM protect any information the Chinese could use to bug or infiltrate computers used by U.S. officials, people familiar with the matter said in February. Officials also were concerned that an IBM facility in Research Triangle Park, North Carolina, could be used by Chinese operatives to engage in industrial espionage, the people said. Lenovo will occupy some of the buildings in the park after the transaction. Lenovo is controlled by Legend Group, which was established in 1984 by the Chinese Academy of Sciences, a government institution. To contact the reporters on this story: Emma Moody in New York at [EMAIL PROTECTED] To contact the editor responsible for this story: Emma Moody in New York at [EMAIL PROTECTED] enditem ------------------------ Yahoo! Groups Sponsor --------------------~--> Give underprivileged students the materials they need to learn. Bring education to life by funding a specific classroom project. http://us.click.yahoo.com/FHLuJD/_WnJAA/cUmLAA/TySplB/TM --------------------------------------------------------------------~-> -------------------------- Want to discuss this topic? 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