Lenovo Acquired Ibm's Pc Business Case Analysis

On Dec. 8, 2004,Lenovo Group Limited, a leading Personal Computer brand in China and across Asia, and IBM announced a definitive agreement under which Lenovo will acquire IBM's Personal Computing Division to form the world's third-largest PC business, bringing IBM's leading enterprise-class PC technologies to the consumer market and giving Lenovo global market reach beyond China and Asia. This transaction marks a new era for the global PC industry.This article makes a comprehensive analysis of this transaction, in the aspects of motives of acquisition, content of transaction, ways of financing, valuation of price, analysis of risks, the reaction of stock market and after-transaction performance. Through using models like DDM, DCF and so on, the article values the price of IBM's Personal Computing Division, the price that Lenovo paid and the synergy and thus to discuss whether Lenevo paid too much in this transaction.