China: IBM acquisition may ruffle US feathers

As China’s Lenovo Group mulls plans to acquire server operator International Business Machines, otherwise known as IBM, reports say the deal is likely to trigger a review by the Committee on Foreign Investment.

The US watchdog reviews acquisition of US firms for national security purposes, say reports, and recent M&A deals between the US and China have sparked some concern within the CFIUS.

Reports say of the 114 CFIUS reviews conducted in 2012, 20 percent of them involved Chinese deals. The figure surpasses UK as the most scrutinized nation in the watchdog’s oversight.

Lenovo first announced earlier this week it is in preliminary discussions for an acquisition, though did not specify IBM as the target. But according to an unnamed source, Lenovo is pursuing a New York IBM unit for a second time. Earlier merger talks failed as the parties could not agree upon an acquisition price. Reports at the time estimated the deal to be worth between $2.5 billion and $4.5 billion, but the IBM unit’s value has reportedly declined since those discussions last May.

Full Content: Bloomberg

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