Lenovo completed the acquisition of IBM PC: cautious not to engage in concessions low price strategy

U.S. Foreign Investment Committee (CFIUS) ahead of the completion of the acquisition of Lenovo's IBMPC business review. Lenovo Group President and CEO Yang Yuanqing accept the first financial daily said in an interview, the most critical is the association will be allowed to provide products and services to U.S. government customers

Newspaper reporter Yang Guoqiang from Beijing

Yesterday (9 may), Lenovo and IBM announced the U.S. Foreign Investment Committee (CFIUS) ahead of the completion of the acquisition of Lenovo's IBMPC business review. Said Lenovo Group CEO Yang Yuanqing yesterday to accept the "First Financial Daily" interview with reporters, through the review of the transaction to pave the way, combined with relevant Lenovo and IBMPC business will continue to follow the original plan.

Limited concession agreement

After nearly 40 days of review of CFIUS's merger with IBMPC, the two sides signed a strict confidentiality agreement, which deals mainly with the confidentiality of U.S. government customers.

The CFIUS review was started in January 24th, and the reason for the review is that CFIUS's members, the U.S. Department of justice and the U.S. Department of homeland security, are concerned that mergers and acquisitions may pose a threat to U.S. National security. Subsequently, the request of three U.S. lawmakers, the review was delayed for 30 days. Yang Yuanqing told this reporter: foreign companies mergers and acquisitions of U.S. companies through this review is a normal procedure, the United States worried about the threat to national security."

For the reasons for the delay in the review, Yang Yuanqing admitted that this is due to the operation of the competition behind the scenes, while a number of U.S. lawmakers will rise to a high degree of mergers and acquisitions business, so the review was postponed.

Lenovo has been actively cooperate with the review, but in the process of communication and negotiation has been to maximize the protection of their business interests and competitiveness." Yang Yuanqing said, the United States and the United States Trade Commission is composed of 13 bodies of the Commission, each body has its own views, to reach an agreement at the committee level, it is necessary to do a lot of work. So the negotiation process is extremely difficult."

It is reported that Lenovo and CFIUS signed a confidentiality agreement, the two sides have made appropriate concessions, but Yang Yuanqing think the most critical is the association will be allowed to provide products and services to U.S. government customers.

"Review of the results to ensure the legitimate rights and interests, and competitiveness, we will be in accordance with the existing business to continue to provide products and services to various government agencies in the United states." Yang Yuanqing said, the original agreement signed with IBM has not made any changes, the agreement with the government, the scope of mergers and acquisitions, including production, research and development and market forces, there is no change."

It is understood, according to the results of the negotiations: Lenovo and CFIUS after the merger is completed, the new Lenovo can be in the way to the United States government to sell products, but must meet some measures for safety considerations.

Low price strategy

Low price is not our strategy, the new Lenovo to reflect more customer value and innovation." Yang Yuanqing revealed that Lenovo and IBMPC is now the two companies have different product plans and strategies, but to the second quarter after the merger is completed, will launch a unified product line and new product plans.

Lenovo merger is completed, the two sides will be a good complement to the product. "Because the IBM laptop has a strong presence in government customers, and its desktop is relatively weak, but the desktop is Lenovo's strengths."

With the support of IBM, Lenovo is preparing to sell its competitive products to the U.S. market for personal consumption and small and medium enterprises. In March 1st IBM Global Partner Conference, IBM has launched a grand introduction and Lenovo, Lenovo's products are also unveiled in the general assembly. With a series of work, many customers will be more recognition of lenovo." Yang Yuanqing said.

It is reported that Lenovo's most recent survey of more than 4000 customers worldwide show that more than 90% of customers to support the acquisition of Lenovo and the attitude.

Many problems

Yang Yuanqing also said: "through this review, just say you can do the U.S. government's customers, but can not get, but also the ability of lenovo."

In his view, the problem facing the future, to be reflected in four aspects: the loss of customers, employees, business integration and cultural integration.

He said that customers do not lose is unrealistic, but because Lenovo and IBM's work is in place, the customer loss situation will certainly be better than the situation when HP and Compaq merger. In addition, in return, will face a lot of staff turnover problems, Yang Yuanqing said, because Lenovo has already announced a new year organization, there is no IBMPC business sector in high turnover. But Yang Yuanqing is still worried that Lenovo and IBM will face considerable challenges in the integration of national and corporate culture.

Through the review of "just take the first step in the long march." Yu Yang, President of Analysys International believes that Lenovo announced the IBM business and the original Lenovo Group business by Lenovo and Lenovo China completely separate, is to avoid the risk of a reasonable integration process."

Yang Yuanqing finally revealed: Lenovo has reached an agreement with 6 banks loan, the rest is how to implement these loans. There is indeed the uncertainty of the bank's transactions, and now there should be no problems after the review."