IBM sells most of PC business

BEIJING — China’s biggest computer maker, Lenovo Group, said Wednesday it has acquired a majority stake in International Business Machines Corp.’s personal computer business for $1.25 billion, one of the biggest Chinese overseas acquisitions ever.

The deal shifts IBM to a peripheral role in a corner of the technology industry it pioneered.

It creates a joint venture in which Lenovo Group Ltd. takes over the IBM-brand personal computer business, including research and development and manufacturing, while IBM will keep an 18.5 percent stake in the company, said Lenovo’s chairman, Liu Chuanzhi.

The deal makes Lenovo the third-largest PC company in the world, he said.

Like other major Chinese manufacturers hoping to expand overseas, Lenovo is planning to leverage a well-known foreign brand name. Liu said the company would be entitled to freely use IBM’s brand name in five years’ time.

IBM’s computer unit had sales of nearly $13 billion over 12 months ended in September.

Lenovo, founded in 1984 by a group of scholars at the government-backed Chinese Academy of Sciences in Beijing, is China’s biggest computer maker and is also the biggest in Asia. Its shares are traded in Hong Kong.

The announcement Wednesday followed reports that a deal was imminent. On Tuesday, Lenovo’s Hong Kong unit confirmed it was in talks with a “major international company in the information technology business” but hadn’t named the company, saying the negotiations were confidential.

“The bigger the baby, the more difficult the delivery,” Liu quipped when asked about the delay in making a formal announcement.

With speculation about the impending deal mounting, IBM’s stock fell $1.57 per share to $96.10 in Tuesday’s trading on the New York Stock Exchange.