The two companies announced a plan to form a complex
joint venture that would make Lenovo the
third-largest PC maker in the world, behind Dell and Hewlett-Packard, but still give IBM a hand in the PC business. The acqusition is expected to be completed in the second quarter of 2005.

Under the deal, IBM will keep an 18.9 percent stake in Lenovo. Lenovo will pay $1.25 billion for the IBM PC unit and assume debt, which will bring the total cost to $1.75 billion. Lenovo will pay roughtly $650 million in cash and $600 million in securities. The joint venture is expected to ship around 12 million units based on 2003 numbers and have annual revenue from PC sales of $12 billion.