Re Agreement

IBM
                  

Lenovo to Acquire IBM Personal Computing Division; Creating New Leading PC
                   Business with Global Market Reach

IBM (NYSE:IBM) and Lenovo Group Limited (HKSE:992; ADR:LNVGY)

--  Creates world's third-largest PC business with approximately US$12 billion
    annual revenue for 2003

--  Global business with worldwide reach, powerful brand name, balanced product
    offerings and leading R&D capabilities

--  Long-term strategic alliances between Lenovo and IBM in PC sales, service
    and financing worldwide

--  Worldwide headquarters in New York; principal operations in Beijing and
    Raleigh, North Carolina

--  Transaction of US$1.25 billion in cash, equity; total transaction
    consideration of approximately US$1.75 billion

--  IBM to take 18.9 percent equity stake in Lenovo; transaction expected to be
    completed in second quarter 2005

Lenovo Group Limited (HKSE:992; ADR:LNVGY), the leading Personal Computer brand
in China and across Asia, and IBM (NYSE:IBM) today announced a definitive
agreement under which Lenovo will acquire IBM's Personal Computing Division to
form the world's third-largest PC business, bringing IBM's leading
enterprise-class PC technologies to the consumer market and giving Lenovo global
market reach beyond China and Asia.

Lenovo will have combined annual PC revenue of approximately US$12 billion and
volume of 11.9 million units, based on 2003 business results -- a fourfold
increase in Lenovo's current PC business. Lenovo's new PC business will benefit
from a powerful worldwide distribution and sales network covering 160 countries,
global brand recognition through the combination of IBM's highly regarded
'Think' brand notebook franchise and Lenovo's leading brand recognition in
China, enhanced service and support for consumers and enterprise clients, and
consumer strength and market leadership in China, the world's fastest growing IT
market. After the transaction is completed, Lenovo will boast leading notebook
enterprise offerings, leading R&D and expertise in product differentiation,
ensuring greater innovation and enhanced product selection for customers.

As part of the transaction, Lenovo and IBM will enter a broad-based, strategic
alliance in which IBM will be the preferred services and customer financing
provider to Lenovo.

Lenovo will be the preferred supplier of PCs to IBM, enabling IBM to offer a
full range of personal computing solutions to its enterprise and small and
medium business clients.

Stephen M. Ward, Jr., currently IBM senior vice president and general manager of
IBM's Personal Systems Group, will serve as the chief executive officer of
Lenovo following completion of the transaction. Yuanqing Yang, currently vice
chairman, president and chief executive officer of Lenovo, will serve as the
chairman of Lenovo post-transaction.

Chuanzhi Liu, current chairman of Lenovo Group, said, 'As Lenovo's founder, I am
excited by this breakthrough in Lenovo's journey towards becoming an
international company. Over the past 20 years, I've watched Lenovo develop into
the leading IT company both in China and throughout Asia. Since the beginning,
however, our unwavering goal has been to create a truly international
enterprise. From 2003 when we changed our international brand name to 2004 when
we announced our partnership with the International Olympic Committee, to
today's strategic alliance with IBM, I have been delighted to watch Lenovo
become a truly world-class company.'

IBM will have an 18.9 percent ownership share in Lenovo Group and is expected to
recognize a gain on the sale following completion of the transaction. There will
be minimal financial impact resulting directly from the transaction to IBM's
fourth-quarter 2004 results.

'Today's announcement further strengthens IBM's ability to capture the
highest-value opportunities in a rapidly changing information technology
industry,' said Samuel J. Palmisano, IBM chairman and chief executive officer.
'Over the past several years, we have aggressively repositioned IBM to be the
world's leading provider of innovation-enabled solutions for businesses and
institutions of all sizes, in all industries. This requires single-minded focus
on the business client and significant ongoing investments in R&D and the
creation of intellectual capital. At the same time, the PC segment of the
industry continues to take on characteristics of the home and consumer
electronics industry, which favors enormous economies of scale and a focus on
individual users and buyers. Today's announcement further strengthens IBM's
focus on the enterprise, while creating a new global business that is better
positioned to capture the opportunities in the PC industry going forward.

'In Lenovo we have a partner with powerful competitive capabilities in China and
Asia and in consumer and desktop PCs. We have worked very carefully with Lenovo
to put in place all the elements of a strong, successful, enduring global
alliance. IBM will continue to provide our clients with outstanding IBM- and
Think-branded PCs through our alliance. And IBM will play an important role in
the home and consumer markets by creating the advanced microprocessor and open
software technology for the next-generation computing platform -- opportunities
that play to IBM's unique innovation capabilities.'

While the transaction is being completed, both companies expect their existing
PC operations, including customer service and product availability, to continue
as usual. Following the closing of the transaction, Lenovo expects customer
service and product availability will continue as usual as the two companies'
operations are integrated.

Yuanqing Yang, current president and chief executive officer of Lenovo, said,
'The development of the Internet brings both great opportunities for the
development of the PC industry and also significant challenges. To succeed, PC
companies need to have global scope, leading-edge technology and highly
efficient operations. Through acquiring IBM's global PC business and forming a
strategic alliance with IBM, Lenovo will absorb and integrate the skills from
both sides and acquire global brand recognition, an international and
diversified customer base, a world-class distribution network with global reach,
more diversified product offerings, enhanced operational excellence and
leading-edge technology.'

Mr. Yang added that the transaction will help establish Lenovo's international
name recognition by leveraging IBM's powerful global brand through a five-year
brand licensing agreement as well as through ownership of the
globally-recognized 'Think' family of trademarks.

Founded in 1984, Lenovo was the first company to introduce the home computer
concept in the People's Republic of China, and since 1997 has been the leading
PC brand in China and across Asia with annual revenues of approximately US$3
billion. IBM's PC business generated over US$9 billion in revenues in 2003 and
offers a full range of desktop and notebook PC systems.

According to IDC figures for 2003, the combined unit market share of Lenovo and
IBM's PC businesses worldwide is approximately 8 percent. The transaction will
dramatically strengthen Lenovo's global presence in the fast-growing notebook PC
marketplace.

As part of the strategic business alliance, IBM will provide marketing support
and demand generation services for Lenovo products through IBM's existing
enterprise sales force of approximately 30,000 professionals, and through
IBM.com. Lenovo products will also be sold through IBM PC specialists that will
join Lenovo. IBM Global Financing and IBM Global Services, the number one IT
services organization in the world with powerful existing enterprise channels,
will be preferred providers to Lenovo for leasing and financing services, and
for warranty and maintenance services, respectively.

'This is a winning transaction for customers of both companies,' Stephen M.
Ward, Jr., said. 'Our two companies are a perfect fit sharing a common cultural
commitment to innovation, customer service and shareholder value. Looking
forward, Lenovo will pursue an aggressive yet prudent growth strategy and will
boast an industry leading international management team comprising IBM's and
Lenovo's existing senior executives and technology managers. I have great
confidence in the future of this new business.'

Lenovo Group will locate its PC business worldwide headquarters in New York,
with principal operations in Beijing and Raleigh, North Carolina, and sales
offices throughout the world.

Upon completion of the transaction, Lenovo will have approximately 19,000
employees. Approximately 10,000 current IBM employees -- more than 40 percent of
whom already are in China and less than 25 percent of whom are in the United
States -- will join Lenovo. The transaction is expected to have minimal impact
in the aggregate on employment, benefits and compensation in either company.

Transaction Details

As consideration for the transaction IBM will receive at least US$650 million in
cash and up to US$600 million in Lenovo Group common stock, subject to a lock-up
period expiring periodically over three years. IBM will be Lenovo's
second-largest shareholder, with an 18.9 percent interest in Lenovo.
Additionally, Lenovo will assume approximately US$500 million of net balance
sheet liabilities from IBM.

Lenovo will fund the cash portion of the consideration through internal cash and
debt. The equity issuance price will be HK$2.675 per share and is based on the
closing price as of December 3, 2004.

The transaction is expected to be completed in the second quarter 2005 and
requires the approval of Lenovo's shareholders and review by relevant regulatory
organizations. Lenovo Holdings, Lenovo Group's controlling shareholder, has
agreed to vote its shares in favor of the transaction. It is the intention of
IBM and Lenovo to secure signed, local agreements after completion of additional
legal requirements and industrial relations processes where applicable in some
countries outside the United States.

The PC manufacturing portion of the International Information Products Company
in Shenzhen, China, which is co-owned by IBM and Great Wall, is included in the
transaction; IIPC's IBM eServer xSeries manufacturing there is excluded.

For more information on this transaction, please visit
www.lenovogrp.com/dealinfo/deal.htm

Investor and Press Webcast Details

IBM: A webcast hosted by IBM Senior Vice President and Chief Financial Officer
Mark Loughridge is scheduled to begin on Tuesday, December 7 at 9:15 p.m. (EST).
Investors and press may view it at www.ibm.com/investor/events/ir1204. Replays
will be available shortly after the completion of the original webcast.

Beijing Media Event Details

Lenovo will host a media event in Beijing on December 8 at 9:00 a.m.
(Beijing/Hong Kong). The event can be accessed via a live webcast at
http://lenovo.broadcastone.net/announce.htm, using passcode: be26i.

About Lenovo

Lenovo Group Limited (HKSE: 992; ADR: LNVGY) is a leading IT enterprise in
China. The Group engages primarily in the manufacturing and sale of desktop
computers, notebook computers, mobile handsets, servers and peripherals in
China. Lenovo brand PCs have been the best seller in China for seven consecutive
years, commanding a 27.0 percent unit share of China's PC market in 2003. Lenovo
PCs also ranked number one in the Asia Pacific (excluding Japan) market with a
12.6 percent market share in 2003 (source: IDC).

Lenovo was listed on The Stock Exchange of Hong Kong in 1994 and is currently a
constituent stock of the Hang Seng Index and the MSCI China Free Index. Its
American Depositary Receipts are traded in the United States. In March 2004,
Lenovo joined The Olympic Partner Program of the International Olympic Committee
(IOC) as the first Chinese company to become the computer technology equipment
partner of the IOC for the period from 2005 to 2008.

For more information, please visit www.Lenovo.com

Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein,
statements contained in this release may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks, uncertainties and other factors that
could cause actual results to differ materially, as discussed in the company's
filings with the U.S. Securities and Exchange Commission (SEC).

    CONTACT: Media and Investor Contacts
             IBM
             Edward Barbini, 914/499-6565
             [e-mail]
                         or
             John Bukovinsky, 914/499-6212
             [e-mail]
                         or
             Lenovo
             Beijing:
             Zhu Guang, +86 10/5886-6111
             [e-mail]
                         or
             Hong Kong:
             Angela Lee, 852/2516-4810
             [e-mail]
                         or
             International:
             Philip Lisio,  +86 10/8520-6505
             [e-mail]