IBM selling up to $85 mln in Lenovo shares

Chairman, President and Chief Executive Officer of IBM, Samuel Palmisano (L) shakes hands with India's mobile phone services firm Bharti Chairman Sunil Mittal during a business forum in New Delhi, May 8, 2007.

HONG KONG (Reuters) - U.S. computer firm IBM (IBM.N) on Tuesday was further shedding its stake in number-three global PC maker Lenovo Group Ltd. (0992.HK), selling up to $85 million worth of shares at a discount of 4-6.7 percent to the stock's Tuesday close, according to a term sheet.

The U.S. company was selling 223 million Lenovo shares, or roughly one-third of its remaining holding, at a range of HK$2.92-HK$3.00 each in a deal handled by Citigroup (C.N).

Lenovo shares dipped 0.32 percent on Tuesday to close at HK$3.13 each before the share sale hit the market.

Tuesday's share sale follows a similar move in February, when IBM, Lenovo's second largest shareholder after the Chinese government, raised US$123 million by selling 300 million shares at HK$3.20 each.

IBM held about 7.4 percent of Lenovo before Tuesday's sale. It acquired its Lenovo stake at HK$2.675 a share when the Chinese firm bought IBM's ailing PC arm for US$1.25 billion in 2005.

Under that deal, IBM hade been entitled to sell a third of its shares every year between May 2006 and May 2008. But it struck a deal last year that allowed it to exit its holding by November 2007 -- six months earlier than previously agreed.

Shares in Lenovo have dipped by 3 percent over the last three months and are up by 10 percent in the past year.

(US$=HK$7.8)