IBM (NYSE: IBM)  has hit a potential snag that could upend or alter the US$1.25 billion sale of its personal computing  division to Chinese rival Lenovo.

The Committee on Foreign Investments in the United States, a group composed of officials from the Treasury Department, Department of Homeland Security and other agencies, has raised national security  concerns about the deal, Bloomberg News reported.

The committee is concerned that Chinese operatives might use IBM's facility in Research Triangle Park for industrial espionage and steal technologies for military purposes, Bloomberg reported, citing unidentified people familiar with the matter.

Restructuring Possible

It's a notion perplexing to some, but one IBM must take seriously. The company must win approval from the committee, abbreviated as "CFIUS," before it can proceed with the transaction. The group has the power to require a formal investigation and approval from President Bush.

"There aren't that many deals where they say flat no," said Ed Rubinoff, who specializes in international trade issues and is a partner with law firm Akin Gump Strauss Hauer & Feld in Washington. "If there's a big objection, either the parties won't go forward with the deal or they try to restructure it in some way" to ease the fears.

Any transaction on the scale of the IBM deal that involves a Chinese company is going to attract extra scrutiny, Rubinoff said. The communist Chinese government has close ties with many companies there.

The foreign investment committee must ensure U.S. national and economic security is not jeopardized, Rubinoff said.

Local IBM spokesman John Lucy declined to comment. The company has said it is cooperating with all government agencies.

Molly Millerwise, a spokeswoman for the Treasury Department, which leads the committee, also declined to comment on the issue.

IBM in NC

IBM in December announced its intention to sell the PC division to Lenovo and create the world's No. 3 computer maker. The business , which helped define IBM, has become a drag amid rising competition and shrinking profits.

Its fate matters much to the Triangle, where IBM employs 13,000, because the division is based in RTP. About 2,000 local workers will be moved to Lenovo when the deal is complete, which IBM previously expected to happen by April.

Local officials have begun sorting through a range of logistical issues to facilitate the transaction. They are as simple as determining whether Lenovo employees can use IBM's fitness facilities and as complex as figuring out how they will get to their offices.

IBM's lucrative consulting arm and software division are among more than 30 IBM business units represented in the Triangle. Also, IBM's PC division employees must pass other divisions as they walk IBM's campus. That could be among the concerns of the government committee.

It might be for naught.

Misunderstanding?

"There may be a misconception," said Martin Reynolds, a fellow at Gartner , a research firm, in San Jose, California. Lenovo "won't have open access to the rest of IBM."

Indeed, IBM plans to eventually move the Lenovo workers off its RTP campus to another location in the Triangle. It hasn't said how quickly the shift will occur.

What's more, Reynolds said, IBM has manufactured its computers in China for years. If spies were going to infiltrate the company, they could have easily done so on the manufacturing floor.

And as for the rest of RTP, one local official said the Lenovo purchase should pose little threat.

"I'm not aware of anything that would be put at risk by this acquisition or this development in the Park," said Rick L. Weddle, president of the Research Triangle Foundation that manages RTP. "We actually are very supportive of this transaction."

The deal has already won approval from the Justice Department, which reviews acquisitions for antitrust  issues.

If it fails to pass scrutiny with the foreign investment committee, look for IBM to pursue other options to sell the PC division.

"They would find an alternative solution," Reynolds said. "One of the things that's very clear is the market doesn't value the PC division. They'll find a way to make this work."