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Business

Toshiba, Fujitsu, Vaio set to scrap PC merger plans

TOKYO -- Talks on integrating Vaio and the personal computer businesses of Toshiba and Fujitsu likely will fall through amid disagreements over issues such as growth strategies and factory consolidation.

     Toshiba, Fujitsu and Japan Industrial Partners, which owns about 90% of former Sony unit Vaio, had discussed a potential PC merger since last fall, aiming to improve efficiency and global competitiveness. Negotiations centered on creating a joint holding company overseeing the three PC businesses. But Fujitsu and JIP reportedly decided against continuing the talks, seeing little value in a three-way merger in the current environment.

     Toshiba, which has been scrambling to restructure unprofitable businesses following an accounting scandal last year, had hoped to get its PC business off the company's books. Going back to the drawing board with Fujitsu and JIP will force Toshiba to search for another taker to buy or integrate with the business.

     Fujitsu now considers PCs a noncore business, focusing instead on information technology services. The Japanese company will consider whether to have the PC business go it alone or find another firm for such an integration.

     The three-way merger plan was intended to boost profit margins in a tough environment by reducing procurement costs for parts and software. But the trio failed to reach an accord by the end of March, the original deadline, as talks on growth strategies and payroll cuts bogged down. Though the companies continued negotiating in hopes of closing a deal by the end of June, they have been unable to bridge these gaps.

     Japan's PC market has fallen to around 10 million units a year from 15 million units a few years ago. With migration to smartphones and tablets and a weakening economy weighing on demand, significant growth is unlikely.

(Nikkei)

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