1. Introduction
Nobel laureate Joseph Stiglitz pointed out that "not a big American company not by some degree, mergers somehow grew up, almost no internal expansion by large companies to grow up." Since China after joining the WTO, with the gradual opening of the domestic market, the large multinational companies have entered the Chinese market, in many industries appliances, elevators, household chemicals, food and beverage, automotive and IT carried out a fierce competition. In order to better respond to competition from multinational companies, China's enterprises have taken the country to seek creative assets to enhance their competitiveness.
Select Lenovo herein as a case study, is based on this background, as a wave of the waves in the wave of Chinese enterprises in cross-border mergers and acquisitions in the business, its acquisition of IBM PC division in recent years, China has become the case of cross-border M & A business the typical case.
2. Lenovo Group acquisition Background
(A) acquisition of the parties Introduction
1. Lenovo Group Profile
Lenovo Group was established in 1984 by the Institute of Computing investment of 200,000 yuan, 11 scientific and technical personnel to do, the combined IBM Personal Computing Division, currently has two headquarters in New York and Beijing, while in Beijing, China and the United States, North Carolina Raleigh established two major operations center, through its own sales organization Lenovo, Lenovo and IBM business partners and alliances, the new Lenovo's sales network throughout the world. Lenovo has over 27,000 employees worldwide. R & D centers in China, Beijing, Shenzhen, Xiamen, Chengdu and Shanghai, Tokyo, Japan and Raleigh, North Carolina. In China's Beijing, Shanghai, Chengdu, Shenzhen, Huiyang and India Ponti its benefits (Pondicherry) and Monterrey, Mexico (Monterrey) with a personal computer manufacturing base, and the use of contract manufacturing and global OEM. According to the US "Fortune" magazine published the 2008 Global 500 list, the association for the first time the list, ranked 499, the annual income of $ 16.788 billion. According to the US "Fortune" magazine released the latest 2012 Global 500 ranking, Lenovo once again the list, ranked 370, the annual income of $ 29.5744 billion, profits of $ 473 million. Over the past ten years, Lenovo Group adhering to the "allow users to use better" concept, is committed to providing the latest and best technology products for Chinese users, and promote the development of China's information industry. Lenovo replace the logo from 2003, 2004, successfully signed a global partner for the International Olympic Committee, to form a strategic alliance with IBM today is one step toward the ranks of the world's top companies.
2.IBM Company Profile
That IBM company IBM (International Business Machines Corporation) abbreviation. Founded in 1911 in the United States, the world's largest technology and business confidence solutions company, currently has more than 310,000 employees worldwide and operations in more than 160 countries and regions.年 2000, IBM's global revenues of more than eighty-eight billion US dollars. But Lenovo's acquisition of its PC business continued losses in the past three and a half years. December 31, 2004, released by the US Securities and Exchange Commission filings indicate that until June 30, 2004, total losses of IBM PC business has been as high as $ 973 million.
(B) transnational Lenovo acquisition of IBM PC business process
December 8, 2004, the association spent a lot of $ 1.25 billion acquisition of IBM's personal computer business in the United States, involving multiple departments R & D, procurement, production and sales, and took over the IBM PC business $ 500 million in debt. Total assets of the acquisition of Lenovo's four times, including IBM's US headquarters, set up R & D centers in Japan and the United States, distributed in more than one hundred branches around the world and more than 10,000 employees. Lenovo's asset-liability ratio has thus reached 27% of its global market share of about 7.8%. After the acquisition, accounting for the global PC market share Lenovo jumped to eighth place third, behind Hewlett-Packard and Dell, the world's third-largest PC vendor. Meanwhile, Lenovo gained ThinkPad, ThinkCenter brand acquisition license and five-year right to use the IBM brand world-renowned. This is our biggest domestic IT companies overseas mergers and acquisitions, new Lenovo annual revenues of $ 12 billion. Through the acquisition of Lenovo's rapid expansion of business scale, the successful implementation of international business operations.
3. Lenovo Group's acquisition of IBM PC business Motivation
(A) crisis facing Lenovo
Lenovo Group Limited (LenovoGroupLimited), founded in 1984, has been China's PC market leader. It set a very brilliant performance in the 1990s, its stock has become a flagship technology stocks in Hong Kong in 2000. Lenovo was also the same year the world more than IR magazine named "China's best companies," only in the domestic PC business success is not that big business can meet ambitious Lenovo founder Liu Chuanzhi had proposed in 2001 Lenovo to enter the world top 500 in a few years, "bigger" at the idea driven, Lenovo Marshal Yang chose a diversified development. Since then, the position of the association, not only as the leader of the domestic PC market, but also at the same time to enter the Internet, cell phones, IT three areas, and strive to become a giant in many ways has a business achievements. But then investors have little effect. Lenovo to enter the Internet in 2000, the biggest move was in April 18, 2000 founded the fm365 portal, but the site operators filling the association into the mire. Now flax365 gone. June 2001 association with the United States was founded AOL Internet joint venture company later can not run any business, Lenovo can ultimately withdraw. 2002 Lenovo offensive transition IT services, but almost no profit. In the same year the association in the mobile communications field has no major breakthrough. The years of hitting the wall finally make the association into the first crisis since creation. In 2003, in addition to the PC business profitable, the phone, IT, Internet, three major business are frequent emergency, a total loss of more than HK $ 200 million.
On this line of business PC business insurance, the association has had to face strong competition from Dell, Hewlett-Packard. More deadly, because the reasons for the market's two associate introduced a 2999 yuan brand of computer, and this computer is the processor used in Intel's rival AMD. Lenovo Group to re-establish its own development. From diversification strategy into international strategy. Since this road is not good diversification away, then stick to their own business advantage (PC), then enter the international market, it will be built into an international association of companies. Despite its success in China Lenovo PC sales experience, but in a more mature market environment rapidly increase our market share is not a simple question. Lenovo's think tank captures a hard-won opportunity --IBM PC business.
(Ii) IBM's PC business continued loss
Just think of to diversify routes frustrated when, IBM-PC business losses year after year, making the company the top selling PC sector firmer idea. The company's PC division in 2001 was $ 397 million loss situation, 2002 was $ 171 million, $ 258 million in 2003. The first half of 2004 was a loss of $ 139 million, PC is - a very special industry, it needs to have a lower price and larger economies of scale to support, in addition, it requires more focus on corporate sales to individuals (IBM's customers are big customers, and the extent of its focus on medium-sized customers is not high). In these respects, IBM PC sales mainly are related to Dell and Hewlett-Packard experienced compete. If you abandon the PC business, IBM will be able to more money and effort invested in other relatively good business, such as servers and other technical fields, especially in the server market.
4. the Lenovo Group's acquisition of IBM PC business brings effect
Lenovo's acquisition of IBM PC business is a major turning point in the history of the Lenovo Group. M classification according to the theory, the Lenovo Group, the acquisition of belonging horizontal mergers and acquisitions can bring economies of scale and management synergies, resource allocation effects, effects of scientific and technological progress and so on.
(A) economies of scale
Lenovo Group's acquisition of scale is mainly reflected in two aspects: First, the M & A strategy to improve the firm size, make Lenovo Group the upstream manufacturers to increase the bargaining power, enhance the ability to control the supply chain; secondly, the implementation of M & A strategy will form more large-scale procurement and manufacture, it will bring a relative decline in fixed and semi-fixed costs, reduce production and operating costs per unit of product.
(Ii) management synergies
Starting from the mid-1990s, IBM PC business to decline in order to avoid a crisis, most of the energy will gradually shift profits richer services and software business, and in these two areas was a great achievement. Both business relative, PC business has become IBM's "skinny dog" business, the ability to obtain profits is clearly insufficient. The PC business to Lenovo's long-term for the main industry, the main source of profit is basically generated by the business PC. Therefore, both the M & A activity can let each play their own management advantages, to achieve management synergies of production.
(Iii) Resource allocation effect
Since both among business Lenovo and IBM PC are highly complementary, so resources with effect from acquisitions is also very obvious. Acquisition will make Lenovo Group the technology industry, IBM Lenovo brand and cost advantages of scale production closely, and take advantage of IBM's sales channels, sales force, customer service and financial resources of IBM Global customer service continues to increase its international status and manufacturers broaden the global market.
(D) Effect of Technology Progress
Lenovo Group acquired in the acquisition of a very significant effect of scientific and technological progress, manifested in two aspects: First, the acquisition strategy enables Lenovo acquired IBM's advanced research and development, marketing resources and process design; Secondly, because both sides of M & A activity is a strategic partnership, the future of the new Lenovo will get more help from IBM, including the powerful post technical support.
5. Conclusion
Lenovo taken a solid step in the wave of cross-border mergers and acquisitions of Chinese enterprises, the experience of post-merger integration and management of risk aversion as well as well as experience gained investigation before its merger in cross-border mergers and acquisitions in China are exploring every step the company offers a place worth learning. Chinese enterprises transnational mergers and acquisitions is still in its infancy, although cross-border M facing a variety of risks and difficulties, but it is the business development and growth, an important way to achieve international operations.
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