Lenovo, the world's No. 4 PC brand, will invest $175 million with NEC to form a joint venture to sell personal computers in Japan, it said on Thursday, as it prepares to take on bigger rivals such as Hewlett-Packard and Dell.
Lenovo and NEC Corporation today announced a strategic relationship that creates a joint venture between the two companies and forms the largest PC group in Japan. The agreement aligns NEC, Japan's number one PC company, with Lenovo. The new joint venture gives both Lenovo and NEC an opportunity to grow their commercial and consumer PC businesses in Japan, the third largest PC market in the world, through a stronger market position, enhanced product portfolios, and expanded distribution channels.
"The new joint venture combines NEC's market reputation, product development capabilities, well-regarded customer service and knowledge of customer needs in Japan with Lenovo's heritage of technology expertise, strong global business momentum, and global supply chain reach. It will give customers in Japan more innovative products that are faster to market, more attuned to their needs, and competitively priced," the cmpanies said in a statement.
Lenovo and NEC will form NEC Lenovo Japan Group, and under this group, Lenovo and NEC will establish a new organization known as Lenovo NEC Holdings B.V., registered in the Netherlands. Under the terms of the agreement, Lenovo will hold a 51 percent stake in the new joint venture, while NEC will hold a 49 percent stake. Hideyo Takasu, currently President, NEC Personal Products, Ltd., will become President and CEO of the new joint venture, while Roderick Lappin, currently Representative Director and President, Lenovo (Japan) Ltd., will become Executive Chairman. Lenovo (Japan) Ltd. and NEC Personal Computers, Ltd., a new company formed as a result of separating NEC's PC business from NEC Personal Products, Ltd. will both become 100 percent subsidiary companies of the new joint venture. As the result of this transaction and upon closing, NEC will receive from Lenovo US$175 million through an issue of Lenovo shares.
NEC has long been the leading PC company in Japan with widespread sales, marketing and distribution capabilities. Lenovo, the fourth-largest PC maker in the world currently has a major research center, known as the Yamato Lab, in Yokohama, Japan, and a main sales office in Tokyo. Combining the operations of both companies in Japan will commence immediately with cooperation and collaboration in manufacturing, development and sales. The transaction is expected to close by June 30, 2011.
During and after the transition from independent operations to the joint venture, both companies expect that all their existing PC operations, including customer service, product delivery and warranty fulfillment, will continue as usual. The current product brand names of both NEC and Lenovo will continue. For consumer products, NEC and Lenovo will continue to maintain their own brands, and provide sales and support through existing routes. For commercial PCs, NEC will continue to market products and support customers through NEC's current channels.
As part of this strategic alignment, Lenovo and NEC have also agreed to discuss further cooperation in other areas, including selling PCs and providing global support to Japanese companies operating outside of Japan; developing, producing, and selling devices such as tablets; and selling additional IT platform products such as servers.