by CIO Staff

IBM Sells Off Part of Its Stake in Lenovo

Feb 06, 20072 mins

IBM sold off a chunk of its stake in Lenovo Group, leading the world’s third-largest PC vendor to temporarily suspend trading of its shares in Hong Kong on Tuesday.

Lenovo spokeswoman Angela Lee said IBM had informed the company it planned to sell a large block of shares but had not provided specific details of the transaction. IBM did not immediately respond to a request for comment.

“The trading of Lenovo’s shares has been suspended at our request, pending the release of an announcement…relating to the placing of Lenovo’s shares by IBM,” Lee said. At 2:40 p.m. local time Tuesday, trading of the company’s shares remained suspended.

Lenovo’s shares were trading at Hong Kong $3.20 (US$0.41) per share when they were suspended, a drop of 7 percent from the previous day’s close.

That price matches the reported selling price IBM received for its shares, which were offered to investors at a discount, according to several press reports Tuesday. Citing information offered to investors, those reports said IBM sold 300 million shares in Lenovo Group in a sale worth HK$960 million.

IBM, which sold its PC division to Lenovo in 2005, has gradually reduced its stake in Lenovo since that deal. A further sale of shares would be in keeping with the company’s stated plan to sell down its stake in Lenovo.

Prior to the reported sale, IBM held a 13.2 percent stake in Lenovo, making it the company’s second-largest shareholder. The sale of shares—estimated at 3.5 percent of Lenovo’s total shares—will reduce IBM’s holdings to 9.7 percent.

While IBM reduces its stake in Lenovo, the two companies remain close partners. Lenovo Tuesday announced the signing of a five-year agreement for IBM to provide technical support, installation, deployment and other PC-related services to its customers. The deal could be worth up to US$245 million to IBM, Lenovo said in a filing to the Hong Kong stock exchange.

-Sumner Lemon, IDG News Service (Singapore Bureau)

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