BEIJING, Jan. 25 -- IBM¡¯s proposed US$1.25 billion sale of its personal computer business to Lenovo Group of China may be held up by U.S. regulators over national security concerns, Bloomberg reported.

    The report, citing unnamed sources ¡°familiar with the matter,¡± said members of the Committee on Foreign Investments in the United States, or CFIUS, were concerned that Lenovo employees might be used to conduct industrial espionage.

    CFIUS is made up of 11 U.S. agencies, including the Department of Justice, the Department of Homeland Security, and is chaired by the Treasury Department.

    IBM had said earlier this month that it had filed for CFIUS approval as part of the chain of U.S. regulatory approvals it was seeking to complete the deal. It has already received antitrust clearance from the U.S. Federal Trade Commission.

    Ed Barbini, a spokesman for International Business Machines Corp., reiterrated Sunday that his company had filed the required regulatory notice with CFIUS.

    ¡°IBM is fully cooperating with all government agencies in their review of this transaction,¡± Barbini said.

    U.S. Treasury Department spokesman Rob Nichols declined to comment on any CFIUS action. The committee reviews acquisitions of U.S. companies by foreign entities to ensure the deals do not put U.S. national security at risk.

    In 2003, the same U.S. oversight body derailed the sale of Global Crossing to Hutchison Whampoa Ltd. , the Hong Kong conglomerate controlled by China¡¯s richest man, due to national security concerns raised by Chinese control of the company¡¯s global undersea cable communications network.

    The Bloomberg story said members of CFIUS were focusing their attention on an IBM facility in North Carolina of the United States.

    Terms of the sale call for IBM to hold an 18.9 percent stake in Lenovo. The company plans to move its PC business headquarters to New York from Beijing.

    Officials say Lenovo¡¯s operations will be jointly run from Research Triangle Park in North Carolina, where the design and marketing of IBM PCs is currently centered, and from Beijing.

    IBM hasn¡¯t produced its own PCs for several years. The bulk of its production is done by manufacturing partners, largely in China.

    The merger of IBM¡¯s PC business with Lenovo would form the world¡¯s third-largest personal computer maker.

    (Source: Shenzhen Daily/Agencies)