Lenovo parent to sell 29% stake

[Brad]

From today's New York Times.

What affect, if any, will there be on ThinkPads?


The biggest stakeholder in Legend Holdings, the parent company of Lenovo, said on Monday that it was seeking to sell 29 percent of Legend’s shares for $404 million.

The stakeholder, the asset management arm of the Chinese Academy of Sciences, owns 65 percent of Legend. Lenovo is the largest personal computer maker in China and the fourth-largest maker of PCs after Dell, Hewlett-Packard and Acer.

A spokeswoman for Legend, Gui Lin, confirmed the academy’s decision to sell the stake, and said the academy wanted to improve management of the company by bringing in another investor with better knowledge of corporate governance and more market expertise.

“It will be one of several Chinese companies, but we don’t know any names,” Ms. Lin said, adding that the conditions for the sale would be that the buyer have at least 4 billion renminbi in registered assets and promise not to restructure the management of the company or resell its stake for at least five years.

She indicated that the academy wanted a deal to be struck by early September. The buyer or buyers would have to complete the transaction in one cash payment of 2.76 billion renminbi , she said.

Lenovo bought I.B.M.’s personal computer business in 2005. Last week, Lenovo reported its third consecutive quarterly loss as sales in the United States and Europe continued to stagnate. The $16 million loss was less than most analysts had expected, though it stood in stark contrast to the company’s profit of $110.5 million a year earlier.

“There was little doubt that this year was going to be a challenge to our industry,” Liu Chuanzhi, Lenovo’s chairman, said last week.

In January, Lenovo announced it would cut 2,500 jobs outside of China as part of $300 million in cost cuts.

Ms. Lin said that the academy’s decision to sell a stake was not because of recent losses at Lenovo, but instead was part of its long-term plan to shift holdings in Legend to market-oriented companies, rather than state-run institutions.

Founded by the academy, the PC maker was spun off in 1984 and was known as Legend until 2003.

Besides Lenovo, Legend Holdings is involved in information technology, real estate and investment services. Its subsidiaries include the venture fund Legend Capital, the real estate firm Raycom, and a private equity arm, Hony Capital.

Ms. Lin said the academy would use proceeds from the sale to finance research and development.