ECONOMICS REPORT - US Clears Sale of IBM Division to Lenovo

By Mario Ritter

Broadcast: Friday, March 25, 2005

I’m Gwen Outen with the VOA Special English Economics Report.

A United States government committee has approved a deal that will make the Chinese company Lenovo Group Limited the third biggest computer maker in the world. Lenovo and the American information technology company International Business Machines announced the deal in December.

Lenovo agreed to buy the personal computer business of IBM for about one thousand seven hundred fifty million dollars. IBM would receive nineteen percent ownership of Lenovo in return. And Lenovo would move its headquarters from Beijing to New York. But at the time, it was not clear if the deal would be approved.

Several American lawmakers had raised concerns about the deal in a letter to Treasury Secretary John Snow in January. Three United States representatives signed the letter. It said the Chinese government reportedly controlled a main shareholder of Lenovo, Legend Holdings.

The lawmakers asked the Committee on Foreign Investments in the United States to investigate the deal. They said the deal could involve giving China new technology. They noted that sales rights and government sales agreements could pass to the foreign-owned company.

The Committee on Foreign Investments in the United States held meetings on the deal. The meetings were not open to the public. The Wall Street Journal newspaper said the committee spent more time than usual considering the effects of the deal.

On March ninth, IBM and Lenovo announced that the committee would not object to their plan. Reports say the committee did place some restrictions on the deal. Lenovo and IBM employees will work in separate buildings at a shared complex near Raleigh, North Carolina.

The Committee on Foreign Investments in the United States is in the Department of the Treasury. It has twelve members including the secretaries of State, Defense, Commerce, and the Treasury. The Attorney General and the United States Trade Representative are also members.

The committee was established in nineteen seventy-five. It was formed to consider and possibly investigate foreign investment in America. Its job is to confirm that national security is not affected by the sale of sensitive businesses or investments to foreign interests.

This VOA Special English Economics Report was written by Mario Ritter. This is Gwen Outen.