IBMs $1.75 billion deal to sell its PC business to Chinese computer vendor Lenovo cleared a major hurdle last week when a U.S. security committee OKd the agreement.
The interagency Committee on Foreign Investments in the United States reviewed the deal, which will create the third-largest PC vendor, after concerns were raised by three members of Congress about what technology would be transferred from IBM to the new company. There were also issues about whether Chinese nationals working for Lenovo in the United States could conduct industrial espionage.
The deal is still scheduled to close next quarter, IBM officials said. Lenovo, which is owned in part by the Chinese government, is buying IBMs PC division, including its ThinkPad laptops and ThinkCentre desktop PCs. The new entity will be based in Armonk, N.Y.; its top executives will be former IBM employees; and 10,000 of Lenovos 19,000 employees will come from IBM. IBM will still sell, service and support the products and will have an 18.9 percent share of Lenovo.
Only one international deal has ever been stopped because of national security concerns. In 1990, President Bush stopped the sale of a Washington aircraft manufacturer to China.
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