Lenovo got Australian IBM unit for AUD $30m

[bill bolton]

Lenovo got local IBM unit for $30m
Ben Woodhead - The Australian
MAY 01, 2007

ELECTRONICS manufacturer Lenovo paid just $30 million to acquire the Australian arm of IBM's desktop and notebook computer business in a deal that secured the Chinese company annual revenue of more than $340 million.

The purchase price is revealed in Lenovo Australia-New Zealand's first full-year financial filing with the Australian Securities and Investments Commission.

The filing also reveals that the new Lenovo subsidiary turned a $6.5 million net loss for the 15 months to March 31, 2006. The 15-month financial year arose because of an overlap between the formation of Lenovo Australia-New Zealand and the start of Lenovo's financial year on April 1.

Lenovo's Australia-New Zealand operations were established in January 2005 after the Chinese computer maker agreed to acquire IBM's PC division in a deal that valued the IBM business unit at $US1.75 billion.

IBM took an 18.9 per cent stake in Lenovo and Lenovo paid $US650 million in cash and $US600 million in shares to acquire the PC division's assets.

The structure of the deal meant that Lenovo acquired the assets of IBM Australia-New Zealand's personal computer division for a total cost of $30.07 million.

No year-on-year financial comparisons for Lenovo Australia were available and the company is not likely to file its 2006 financial report with the Australian Securities and Investments Commission until later this year.

The sale of IBM's personal computer business to Lenovo contributed to a $210.7 million decline in IBM Australia-New Zealand's hardware sales during its most recently reported fiscal year.

ASIC filings show that IBM's local hardware sales fell from $891.1 million in the 12 months to December 31, 2004, to $680.3 million in 2005.

The sales figure includes a four-month contribution from the personal computer business, which was not transferred to Lenovo Australia until May 1, 2005.

Lenovo's $342.3 million revenue for the 15 months to March 31 last year included $319.7 million in product sales, $22.2 million in services revenue and $476,077 in finance income.

The company spent $26.5 million on marketing in its first year and employed 123 people as at March 31, 2006.

End