Although the details are still shrouded in mystery, sources close to the negotiations between computer giant IBM and the China-based PC maker Lenovo Group say that the companies will announce plans tonight for IBM to sell its PC business for as much as $2 billion. Under the terms of the deal, IBM and Lenovo will create a new US-based PC maker, the majority of which will be owned by Lenovo, although IBM will retain a small stake. Although the companies were originally mute about the topic, IBM and Lenovo early this week confirmed that IBM's PC business is on the block.
The new company will be the third largest PC maker in the world and will likely continue to use the IBM name, as well as key IBM brands such as ThinkPad, for at least a few years. It will also have access to IBM's corporate accounts, which is considered key to the new company's success.
Lenovo, which was previously known as Legend, is China's largest PC maker and is partially owned by the Chinese government. However, the company has recently started investigating acquisitions and mergers that would let it better compete with Dell and HP worldwide. Although the new deal with IBM won't technically see all of IBM's PC operations come under the Lenovo umbrella, it will give the Chinese company direct access to the lucrative US PC market. In that market, IBM is in a distant third place behind Dell and HP, and its PC business is said to be only marginally profitable. Shares of Lenovo were halted on the Hong Kong stock exchange in anticipation of the blockbuster deal.