AsiaInfo Holdings plans to buy the IT services operation of China’s largest computer manufacturer Lenovo Group for $36.3m in shares and convertible bonds.
The target operation made revenue of approximately $30m in the year ending March 31, 2004. It will form part of a new division, Lenovo-AsiaInfo, that will pool together 500 employees providing IT services around security, business intelligence, human resources, and e-government technology.
Beijing, China-based AsiaInfo said in a statement that the new division is expected to increase AsiaInfo’s revenue by between 40% and 50% within 12 months of the deal closing. AsiaInfo made revenue of $57.5m in the year ending December 31, 2003.
AsiaInfo said the deal forms part of its strategy of targeting the fast-growing Chinese IT services sector. It cited figures from Chinese research firm CCW which said IT software and services spending in China will grow 28% annually to $32bn in 2008.