IBM sells part of its stake in Lenovo

IBM sold off a chunk of its stake in Lenovo Group, leading the world’s third-largest PC vendor to temporarily suspend trading of its shares in Hong Kong on Tuesday.

Lenovo spokeswoman Angela Lee said IBM had informed the company it planned to sell a large block of shares but had not provided specific details of the transaction. IBM did not immediately respond to a request for comment.

“The trading of Lenovo’s shares has been suspended at our request, pending the release of an announcement … relating to the placing of Lenovo’s shares by IBM,” Lee said. At 2:40pm local time Tuesday afternoon, trading of the company’s shares remained suspended.

IBM did not respond to a request for comment.

Lenovo’s shares were trading at HK$3.20 (US$0.41) per share when they were suspended, a drop of 7 percent from the previous day’s close.

That price matches the reported selling price IBM received for its shares, which were offered to investors at a discount, according to several press reports Tuesday. Citing information offered to investors, those reports said IBM sold 300 million shares in Lenovo Group in a sale worth HK$960 million (US$123 million).

IBM, which sold its PC division to Lenovo in 2005, has gradually reduced its stake in Lenovo since that deal. A further sale of shares would be in keeping with the company’s stated plan to sell down its stake in Lenovo.

Prior to the reported sale, IBM held a 13.2 percent stake in Lenovo, making it the company’s second-largest shareholder. The sale of shares — estimated at 3.5 percent of Lenovo’s total shares — will reduce IBM’s holdings to 9.7 percent of the company.

While IBM reduces its stake in Lenovo, the two companies remain close partners. Lenovo Tuesday announced the signing of a five-year agreement for IBM to provide technical support, installation, deployment and other PC-related services to its customers. The deal could be worth up to US$245 million to IBM, Lenovo said in a filing to the Hong Kong stock exchange.