Experts predict Lenovo's U.S. buys will pass regulatory muster

Fri Jan 31, 2014 12:44pm EST
 
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By Diane Bartz

WASHINGTON (Reuters) - U.S. officials are likely to allow China's Lenovo Group to buy IBM's low-end server business and Google Inc's Motorola Mobility handset business if it agrees to concessions aimed at protecting U.S. national security, experts said.

Computer maker Lenovo has advantages over other Chinese companies that should help it overcome the mutual suspicion between the United States and China over industrial spying and cybersecurity, such as its track record of successful U.S. acquisitions in the past. And importantly, it is not directly controlled by China's government.

Even so, it could be in for a battle over its latest deals with at least one lawmaker expressing concern.

Lenovo said on Wednesday it would acquire Motorola Mobility, along with some 2,000 patents, for $2.91 billion. That news came days after an announcement the company would purchase IBM's low-end server unit for $2.3 billion.

The deals will be reviewed by the inter-agency Committee on Foreign Investment in the United States, or CFIUS, to ensure they do not threaten national security.

"We look forward to going through the regulatory process and we're going to work with the regulators with an open and transparent approach," Lenovo spokesman Brion Tingler said.

Lenovo has been through the secretive CFIUS process three times before and has won approval each time, according to a source familiar with the process.

The first was in 2005, when Lenovo bought IBM's ThinkPad business in a deal that catapulted the company into the global technology big leagues. In that case CFIUS approval came to the dismay of Representative Frank Wolf, a Republican from Virginia and a tough critic of China.   Continued...

 
Lenovo's laptop PCs are displayed at an electronic shop in Tokyo September 5, 2012. REUTERS/Kim Kyung-Hoon