Lenovo told Reuters that the companies “agree that given the current economic turmoil and uncertainties, it is not feasible to reach an agreement on a transaction at this time.”

The statement suggests Positivo balked at the valuation. Its shares are down 80% this year to a market cap of ~$420 million.

The wire service was also told the pair is “exploring a broad strategic alliance that would create long-term shareholder value for both companies.”

The Brazilian media has also had Dell bidding for Positivo, which is supposed to own roughly 21.5% of the Brazilian market.

Last week Lenovo told the Hong Kong stock exchange that it had had “certain preliminary discussions with independent third parties regarding potential investment opportunities” No targets were identified but reports pointed in Positivo’s direction.

There’s also been talk it might buy the PC part of Fujitsu Siemens.

Lenovo has complained lately of slowdowns in India, Russia and China and its profits last quarter dropped 78%.

The Chinese company, which is reportedly to have about $2 billion in the bank, bought IBM’s PC unit in 2005 and was foiled by Acer when it tried to buy the Dutch-based Packard Bell last year.