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Submitted by clampclamp on October 6, 2005
Category: Business
Words: 2249 | Pages: 9
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International M&A cases investigation
Case ¢ñ: LENOVO Ltd. Co. purchased IBM¡¯s worldwide PC business.
On May 1st, 2005, LENOVO Ltd. Co., one of the most famous PC producers in China, declared officially to the whole world that it had successfully purchased IBM¡¯s worldwide PC business, including the business of Table computers and Laptops. The huge purchasing price amounted to 1.75 billion USD. However, what¡¯s the most significant for LENOVO was that it would become the third largest PC producer all over the world and rank among the global Top 500 corporations with a consolidated yearly income of 12 billion USD.
Motives:
As the largest domestic PC producer in China, LENOVO had been developing fast and operated well since it was established in 1988. Not only it came into the stock market at Hong Kong United Securities House in 1994 and later became one of the largest PC producers in Asia but also developed a brand new computer, ¡°SHENTENG 6000¡±, which ranked 14 among the World Super Computer Announcement Board.
However, LENOVO realized what it achieved during these years was still not enough to compete with those top PC producers, such as DELL, HP, TOSHIBA and so on because its internationalization was just starting. In order to accelerate this process LENOVO had two ways to choose: one is self-development and the other is merger. But for Chinese corporations, it is still very difficult to choose the first approach because in the eyes of most foreign people, Chinese domestic corporations just imply low value, low cost and even poor quality so it is almost impossible if LENOVO want to set up a famous brand in this way. And therefore, it had to choose the way of merger, but the first thing was to select the very right and potential company. If LENOVO chose a small company with little fame, it would also encounter similar problems.
Just right the moment, IBM...
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