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Last Updated: Monday, 24 January, 2005, 07:39 GMT
IBM deal fears lift Lenovo shares
Lenovo PCs on display in Beijing
Lenovo is China's biggest PC seller, with 27% of the market
Shares in Chinese computer maker Lenovo have risen on reports that the firm's takeover of IBM's personal computer business could hit regulatory trouble.

The ground-breaking $1.75bn (930m) deal, unveiled in December, will see PC pioneer IBM get out of the business.

But reports say US regulators are worried IBM's US factories could offer opportunities for industrial espionage.

Lenovo shares rose 6% on hopes that the purchase of the IBM unit, unprofitable for three years, could fall through.

"The market consensus is quite negative on the deal so if it doesn't go through then everything is back to normal," said Marvin Lo, an analyst at BNP Paribas.

Year to March 2004
Sales: HK$23bn ($2.3bn; 1.5bn)
Profits: HK$1.5bn; ($193m; 100m)
Source: Lenovo

It was a "rather embarrassing reason" for the shares to climb, he said.


The main potential stumbling-block for the takeover is the Committee on Foreign Investments in the US (CFIUS).

Its members include several government departments, and reports from Bloomberg News suggested over the weekend that the Justice Department and the Department of Homeland Security are both concerned about the deal.

If the CFIUS refuses to nod it through, the next stage could be a formal investigation and the need for President George W Bush to clear the deal himself.

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