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U.S. Treasury extends review of IBM/Lenovo deal

U.S. Treasury extends review of IBM/Lenovo deal

The US Department of Treasury will extend its review of the sale of IBM's PC business to China's Lenovo Group for an additional 45 days, according to a source in the US Congress.

The department's Committee on Foreign Investment in the United States (CFIUS) would conduct an extended review of IBM's plans to sell its PC business to Lenovo for $US1.75 billion, said the congressional source, who spoke on the condition of anonymity.

The extended review comes after three Republican congressmen, all chairmen of committees in the US House of Representatives, wrote a letter to the Treasury Department expressed concern over the deal. They questioned whether the sale would give advanced technology and corporate assets to the Chinese government.

The extended review comes after a mandatory review of sales of US companies to foreign investors. Such sales are required to be reported to CFIUS, and the committee has 30 days to review the deal, unless committee members determine a longer review is needed. President George Bush can decide whether or not to approve the deal after the CFIUS reviews. It's not clear whether the extended review would threaten the sale.

A Treasury Department spokesperson declined to comment on the review, saying the agency did not comment on cases that CFIUS might review because of "national security concerns".

Earlier last week, IBM spokesman Edward Barbini declined to comment on the CFIUS review.

"IBM is following all the normal and routine procedures in the review of this transaction," he said.

IBM representatives could not be reached late last week.

Although an extended review of the deal was a setback for Lenovo, the acquisition was unlikely to be blocked, Helen Lau, an analyst at Celestial Asia in Hong Kong said. However, the US government might block the sale of IBM's PC R&D operations to Lenovo on national security grounds while allowing the rest of the deal to go through, Lau said.


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