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9
of diversification and a focus on the domestic market between 2001 and 2003,
Lenovo chairman Yang Yuanqing said in an interview with the South China
Morning Post, Lenovo shifted its business philosophy. “On the one hand, we’d
optimize our advantages in the domestic market, on the other, use it to ‘attack’
the international market,” he said.
2.2 The Acquisition Deal
Lenovo proposed to acquire IBM’s PC Company Division, which marketed the
ThinkPad line of notebook PCs for approximately $1.75bn—$650 million in cash
and up to $600 million in shares, giving IBM an 18.9% stake as well as $500
million in debt.9 The U.S. private equity fund Texas Pacific Group was Lenovo’s
fiercest rival. TPG offered about $100m less, all in cash, but IBM opted for
Lenovo’s offer. The reasons were: (a) IBM wanted to retain a stake in the market
it created with the first IBM personal computer in 1981; (b) IBM understood that
China was a huge developing market for PCs and thus by retaining a stake in a
partnership with a Chinese company they were far better positioned to profit in
that market. Presumably, IBM’s stake in Lenovo also contributed to boosting
confidence in the acquisition precisely because of the intricate connection
between the two companies.
The Committee on Foreign Investment in the United States, the government
group that vets deals affecting national security, investigated the deal and
eventually approved it.
9 Mure Dickie, Francesco Guerrera, Justine Lau and Simon London. “Lenovo
buys IBM’s PC unit for $1.75bn.” Financial Times. December 9, 2004.
Object Description
| Title | China's investment in the United States and the public relations implications: A case study of the Lenovo-IBM acquisition |
| Author | Liang, Shuyan |
| Author email | shuyanliang.usc@gmail.com; shuyanli@usc.edu |
| Degree | Master of Arts |
| Document type | Thesis |
| Degree program | Strategic Public Relations |
| School | Annenberg School for Communication |
| Date defended/completed | 2011-04-30 |
| Date submitted | 2011 |
| Restricted until | Unrestricted |
| Date published | 2011-05-04 |
| Advisor (committee chair) | Kotler, Jonathan |
| Advisor (committee member) |
Floto, Jennifer Wang, Jian (Jay) |
| Abstract | This paper discusses Lenovo’s acquisition of IBM’s personal computer division in 2005 as a case in point to explore issues involved in China’ investment in the United States, particularly its public relations implications. It is demonstrated that media coverage underscored the complications and tensions in these supposedly free market activities. This paper presents the manifestation of controversial issues such as state-ownership of businesses, national security, and economic protectionism, as Chinese enterprises invest in the United States through mergers and acquisitions. It provides an account of Lenovo’s communication strategies and gives suggestions to better manage corporate reputation and brand images for Chinese companies that are seeking overseas investment. |
| Keyword | Lenovo; IBM; China; United States; foreign direct investment (FDI); mergers and acquisition (M&A); public relations (PR) |
| Geographic subject (country) | China; USA |
| Coverage date | 2005/2010 |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m3902 |
| Contributing entity | University of Southern California |
| Rights | Liang, Shuyan |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | cisadmin@lib.usc.edu |
| Filename | etd-Liang-4567 |
| Archival file | uscthesesreloadpub_Volume32/etd-Liang-4567.pdf |
Description
| Title | Page 16 |
| Contributing entity | University of Southern California |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 9 of diversification and a focus on the domestic market between 2001 and 2003, Lenovo chairman Yang Yuanqing said in an interview with the South China Morning Post, Lenovo shifted its business philosophy. “On the one hand, we’d optimize our advantages in the domestic market, on the other, use it to ‘attack’ the international market,” he said. 2.2 The Acquisition Deal Lenovo proposed to acquire IBM’s PC Company Division, which marketed the ThinkPad line of notebook PCs for approximately $1.75bn—$650 million in cash and up to $600 million in shares, giving IBM an 18.9% stake as well as $500 million in debt.9 The U.S. private equity fund Texas Pacific Group was Lenovo’s fiercest rival. TPG offered about $100m less, all in cash, but IBM opted for Lenovo’s offer. The reasons were: (a) IBM wanted to retain a stake in the market it created with the first IBM personal computer in 1981; (b) IBM understood that China was a huge developing market for PCs and thus by retaining a stake in a partnership with a Chinese company they were far better positioned to profit in that market. Presumably, IBM’s stake in Lenovo also contributed to boosting confidence in the acquisition precisely because of the intricate connection between the two companies. The Committee on Foreign Investment in the United States, the government group that vets deals affecting national security, investigated the deal and eventually approved it. 9 Mure Dickie, Francesco Guerrera, Justine Lau and Simon London. “Lenovo buys IBM’s PC unit for $1.75bn.” Financial Times. December 9, 2004. |
