Chinese tech behemoth Lenovo — the largest PC maker globally, is looking to urburden Fujitsu of its responsibilites towards the personal computing arm (Shocker! It even had one ?!?!). It would not only give the former more control over the market but also provide the latter with more time to focus on IT services and other businesses, reports sources close to the development.
The two companies are currently amid early talks but aim to reach a possible deal by the end of this month. Fujitsu has been looking to offload its loss making non-core business assets to improve profitability. It will, thus, transfer control of its design, development, and manufacturing operations for PCs to Lenovo. There is currently no word on the financial terms of the merger deal.
While Lenovo accounted for a total of 21.1 per cent of global PC shipments in the second quarter, Fujitsu trailed far behind at the ninth place with a market share of a meager 1.1 per cent. It is, however, ranked second in its home market Japan where it loses to none other than Lenovo(thanks to the NEC joint venture). Lenovo is, thus, looking to strengthen its control on the market and increase sales by building trust via another known brand in the country.
Ever since the announcement of these initial talks, Fujitsu shares have climbed and closed up about 5.7 per cent in the Tokyo trading. Lenovo has also witnessed a 2 per cent spike in its share prices. The investors have possibly accepted the news of the acquisition of Fujitsu’s PC business with open arms.
If completed, Fujitsu will be the second Japanese PC manufacturer after NEC Corp. to seek out control and help from the largest computer maker to stay competitive and grow in the current market. Fujitsu decided to spin-off its personal computing business out as a subsidiary of the parent company due to its low prioritization. It currently employs over 2,000 people in the PC business.
Source with knowledge of the deal also say that the Lenovo-Fujitsu deal could be structured along the lines of the aforementioned NEC acquisition. The Chinese PC maker would shell out a good deal of money to acquire a majority stake in the company to lead the business, while letting Fujitsu retain a minority stake. Commenting on the rumors of the Lenovo merger, a Fujitsu spokesperson said,
We are considering various options for the PC unit, including a possible deal with Lenovo.
According to reuters, the Japanese manufacturer has previously initiated talks for a three-way merger of their PC businesses with Toshiba Corp and Vaio Corp. But, the talks didn’t materialise as they were unable to agree on all agreement details.
Laptop shipments(and sales) in Japan has shrinked due to an increased focus on portable hand-held smartphones and tablets. Consumers are now leaning towards using their mobile phones for internet access and communication. Fujitsu, though didn’t make the top five PC makers list, but performed well in its home market. It shipped about 4 million units in the year ended in March 2016.