NEW YORK -- China's Lenovo Group will buy IBM's PC business for $1.75 billion in cash and stock, according to several news reports and company sources.

With the acquisition, Lenovo would become the third-largest PC company in the world, with sales of $12 billion, said Lenovo chairman Liu Chuanzhihe.

IBM is currently the third largest maker of PCs, behind Dell (16.4%) and HP(13.9%). The merged company will have an 8% share of the global PC market.

Leveno will acquire a 81.1% stake with IBM holding 18.9%.

Stephen M. Ward, Jr., currently IBM senior vice president and general manager of IBM's Personal Systems Group, will serve as the chief executive of Lenovo when the deal closes. Yuanqing Yang, currently vice chairman, president and chief executive of Lenovo, will become chairman of Lenovo.

Lenovo, China's biggest computer maker, claiming a 27% share, is traded publicly on the Hong Kong exchange.

In a Dec. 8 research note, Deutsche Bank analyst Chris Whitmore said anticipated supplier consolidation by Lenovo could hurt Sanmina-SCI. DB estimates Sanmina-SCI generates about 20% of its revenue from building PC boards for IBM.

"We believe IBM-Lenovo will look to consolidate its supply base following the completion of the acquisition, creating downward pressure on margins [and] pricing across the PC supply chain," Whitmore wrote. He speculated that Sanmina-SCI would either see less volume and lower margins.

Sanmina-SCI could lose $50 million in annual operating profits if Lenovo were to end IBM's existing PC board supply deal.

Lenovo was founded in 1984 and was formerly known as Legend. It has a 2% share of the PC market, according to Gartner.