People with knowledge of the two deals reported that Lenovo Group Ltd has turned to national security insiders in order to win the approval of the U.S. to buy the Motorola Mobility phone unit of Google Inc. and the low-end server business of International Business Machines Corp.
Currently, the company is the largest personal-computer maker in the world. As reported by Bloomberg, one of the people familiar with the matter said that Lenovo Group has hired some attorneys at Steptoe & Johnson, who held positions at the Central Intelligence Agency and the Homeland Security Department to guide its Motorola review through a key inter-agency panel. According to another person with knowledge of the deals, David Fagan and Mark Plotkin are representing Lenovo in the International Business Machines deal.
Kenneth Gross, who is a lawyer working at Shadden, Arps, Slate, Meagher & Flom LLP, said for Bloomberg: “Its not uncommon for a company that is going to have more regulatory issues in Washington to beef up its lobby presence. It goes with the territory in terms of entering the Washington regulatory scene to beef up your presence here with lobbyists and others.”
Yang Yuanqing, who is the Chief Executive Officer of Lenovo, announced that he intends to spend a combines 5 billion dollars to Motorola and the server business in an attempt to shift its focus beyond the shrinking personal-computer industry and become one of the major technology players globally. Chief Executive Yang believes that Lenovo should make some more aggressive moves into North America in order to become more competitive against Apple Inc. and Samsung Electronics. Co. in smartphones business and against Dell Inc. and Hewlett-Packard Co. in servers business.
As reported by Bloomberg, James Lewis, who is a senior fellow at the Center for Strategic and International Studies in Washington, said that he did not expect the same reaction to Lenovo that met efforts by two other Chinese companies – ZTE Corp. and Huawei Technologies Co., to expand their footprint in the telecommunications market in the U.S.
Mr. James Lewis revealed that the acquisition of IBMs PC business has already been vetted by U.S. Officials, and Lenovo Group has proved itself to be a cooperative and open enough during the investigation. Lenovo is also said to be buying a low-end, customer-oriented business. Mr. Lewis said for Bloomberg: “If you had to pick a Chinese company that wasnt going to run into trouble, it would be them. This is a pretty vanilla deal, as opposed to the backbone telecom products, which have always been considered a strategic inducstry. No onle considers servers or handsets strategic.”
According to Bloomberg, the current share price of Lenovo Group Ltd is 8.21% down, and its one-year return rate is 25.34% up.
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