October 31, 2017 6:03 am JST

Lenovo poised to take majority stake in Fujitsu PC unit

Japanese company's FMV brand, main plant likely to remain intact

Lenovo Group looks to increase cost competitiveness in personal computers by integrating its PC operations with Fujitsu's.

TOKYO -- Fujitsu and China's Lenovo Group are expected to announce a final agreement to integrate their personal computer operations as soon as this week, with the Japanese company apparently preserving crucial aspects of the brand while giving up a majority stake in a key PC subsidiary.

The two companies announced a strategic partnership on PC operations in October 2016 and began integration talks soon after. But details concerning the integrated unit's structure after the deal had delayed the negotiations.

Lenovo already has reached a basic agreement to buy into Fujitsu Client Computing. It is expected to take a 51% stake for around 20 billion yen ($176 million), while the Development Bank of Japan holds a 5% interest. Fujitsu's stake will likely decline from 100% to 44%.

After becoming a joint venture, Fujitsu Client Computing is to maintain its more than 900 employees, its laptop manufacturing center in Shimane Prefecture and its FMV brand of PCs. Lenovo took control of Fujitsu compatriot NEC's personal computer operations in 2011 but will keep those Japanese facilities separate from Fujitsu's business.

Lenovo was the largest seller of PCs in 2016, controlling 21% of global sales. The company grabbed about 30% of the Japanese market after integrating operations with NEC. The Fujitsu deal is seen lifting that figure to nearly 40%. The Chinese company will improve cost competitiveness by combining sales channels and parts suppliers, among other economies of scale.

Fujitsu's FMV brand remains popular among schools and government agencies. The business is profitable with expected sales of 400 billion yen in fiscal 2017. But the domestic market has reached its ceiling, and the business environment is becoming increasingly severe. The company looks to sell 3.8 million units in fiscal 2017, less than half of its peak in 2007.

As Fujitsu shores up PC operations through this deal with Lenovo, the Japanese company also looks to rebuild earnings power by shifting more management resources to the information technology services field.

(Nikkei)

Fujitsu Ltd.

Japan

Market(Ticker): TKS(6702)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 14,895.9M
Shares: 2,070.02M
Asia300

Lenovo Group Ltd.

Hong Kong

Market(Ticker): HKG(992)
Sector:
Industry:
Electronic Technology
Computer Processing Hardware
Market cap(USD): 6,628.66M
Shares: 12,014.8M

NEC Corp.

Japan

Market(Ticker): TKS(6701)
Sector:
Industry:
Electronic Technology
Electronic Equipment/Instruments
Market cap(USD): 7,281.5M
Shares: 260.47M

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