The government's Committee on Foreign Investments in the United States, or CFIUS, which reviews acquisitions of U.S. businesses by foreign corporations, has opted for an extended review of the deal, The Wall Street Journal and Bloomberg reported Friday.
Although the extended investigation does not signal an attempt to block the deal--all transactions involving U.S. and offshore companies are subject to a minimum of a 30-day review by the CFIUS--fewer cases are said to make it to the extended review process, which is required to take 45 days or less, the news agencies reported.
A Treasury Department representative declined to comment on the matter, citing federal security rules. But IBM said it is working with the committee.
"IBM is cooperating fully, and we are confident in the process and its outcome," Ed Barbini, an IBM spokesman, told CNET News.com on Friday.
Although the extended review might be considered to be fairly rare, it's not unexpected in the case of IBM and Lenovo. Earlier this week,CFIUS to conduct a full investigation of the proposed sale. Bloomberg also reported earlier this week, citing unnamed sources, that the deal is .
"First, this transaction may transfer advanced U.S. technology and corporate assets to the Chinese government," according to a letter, signed by Reps. Henry Hyde, R-Ill., chair of the House International Relations Committee; Duncan Hunter, R-Calif., chair of the House Armed Services Committee; and Don Manzullo, R-Ill., chair of the House Small Business Committee. "Second, this transaction may transfer licensable or export-controlled technology to the Chinese government. Finally, this transaction may result in certain U.S. government contracts with or involving (personal computers) being fulfilled or participated in by the Chinese government."
Announced in December,is valued at $1.75 billion. Under the deal, Lenovo will and will be able to use IBM PC brands such as ThinkPad for five years. IBM will take an 18.9 percent stake in the new Lenovo, which would reincorporate in the United States.
Normally, CFIUS would have until the end of January to either approve the Lenovo deal or pass it along for further investigation and ultimately presidential clearance. The three representatives, who urged the extended review, said that's not a realistic deadline as the merger announcement was made while Congress was on holiday recess.
Barbini noted that "IBM believes that the CFIUS process is an appropriate and effective way to address the national security interests of the United States."
The Lenovo deal cleared one of itsearlier this month when the Federal Trade Commission indicated it would not raise any antitrust objections.