Cross-Border Acquisitions and Mergers

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Process of Lenovo and IBM Cross-Border Mergers and Acquisitions Cross-border mergers and acquisitions are very complex investment activities. The process of mergers and acquisitions involve all aspects of professional knowledge, only depend on both sides of enterprise is difficult to complete. In the process of Lenovo mergers IBM PC business, the functions of intermediary organizations are very important. Such as in 2003, Lenovo hired Mckinsey as their strategic consultant to comprehensive understanding the possible of mergers and acquisitions and integration of IBM after finish cross-border mergers and acquisitions. “In December 2004, it was announced that Lenovo Group Limited, the largest information technology company in China, will acquire IBM’s Personal Computing Division. This transaction is expected to close in the second quarter of 2005.(2004 IBM Annual Report, p 17)” Financial Aspects

The actual transaction price of IBM Personal Computing business is 1.75 billion dollars, including 650 million dollars in cash, worth 600 million dollars Lenovo stocks and the PC division debts of 500 million dollars. IBM will hold approximately 19% of Lenovo stocks. Since the second quarter of 2005, Lenovo will divide into three years to pay the service fee 705 million dollars to IBM.(www.lenovo.com.cn) Personnel Aspects

Mr Yuanqing Yang would replace Mr Chuanzhi Liu, the founder of Lenovo, as the chairman of the board in Lenovo. Mr Chuanzhi Liu is the non-executive chairman of the board. Mr Stephen Ward, the former IBM senior vice-president and general manager of IBM PC Division would be the CEO and board of directors. After finished cross-border mergers and acquisitions, Lenovo would get 19,000 employees which almost 9500 from IBM and 10000 from Lenovo. Business Aspects

Lenovo and IBM will organize a long-term strategic alliance in the global PC sales, services and customer financing fields. The IBM Global Financing and IBM Global Services and its existing powerful enterprise-level channels would separately become the first choice of suppliers of Lenovo rental and financial services. The Process of Lenovo Mergers IBM Briefly

At the beginning of 2004, Lenovo decides to negotiate with IBM officially. In May 2004, Lenovo completes the initial research and the first edition mergers and acquisitions’ plan. In October 2004, Lenovo and IBM enter into intensive negotiations stage. In 8th December, 2004, Lenovo and IBM announce an agreement by which Lenovo will acquire IBM’s Personal Computing Division, its global PC (desktop and notebook computer) business. The acquisition forms a top-tier (third-largest) global PC leader. In 1st May, 2005, Lenovo completes the acquisition of IBM's Personal Computing Division, making it a new international IT competitor and the third-largest personal computer company in the world.  (Recourse: Lenovo History from www.lenovo.com ) Analysis of the Results of Cross-Border M&A

The Meaning of M&A for Lenovo and IBM
Through three years diversified expansion practices and experiences, Lenovo developed their own development strategies focusing on PC manufacturing and sales, at the same time set a goal of internationalization. The mergers and acquisitions of IBM PC division is the most important step for Lenovo transform from diversification to specialization and finally moved on international development. This M&As made Lenovo get IBM PC Technology Centre which improve Lenovo PC technology grown by leaps and bounds and also rapid advancement of the competitiveness in PC industry. The most important thing is, Lenovo through mergers and acquisitions won the IBM almost 160 distributions and sales networks all around the world, and also get a wide range of global recognition. Yuanqing Yang, the current president and chief executive officer of Lenovo, said, "The development of the Internet brings both great opportunities for the development of the PC industry and also significant challenges. To...
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