Lenovo to Acquire Stake in PC Joint Venture with NEC

7 Jul

China-based computer maker Lenovo will spend US$195 million to buy 44 percent of NEC’s shares in Lenovo NEC Holdings, a joint venture between Lenovo and NEC, as the Chinese company seeks to further expand its presence in the PC market, Japan’s Nikkei reported.

NEC currently owns 49,000 shares in the joint venture and plans to sell all but 4,900 shares to Lenovo on July 28. The report said almost all the proceeds from this sale will be booked as non-operating income for the 2016 fiscal year. NEC plans to use the money on the development and production of social infrastructure, Nikkei said.

According to the report, the two companies jointly established Lenovo NEC Holdings in 2011, which owns NEC Personal Computers and Lenovo Japan and operates PC productions for both NEC and Lenovo brands. Lenovo owns 51 percent of the shares in the joint venture, while NEC holds 49 percent. Products made by the joint venture accounted for a quarter of the global market share and the company continues to lead technological advantages in commercial, government, and consumer electronics fields.

As part of the stake transfer, Lenovo NEC Holdings plans to issue deferred shares to NEC. Those shares come with voting rights but not dividends. The report said NEC will maintain 33.4 percent of the voting rights, retaining the veto rights over important actions in the future, according to the report.

(Photo courtesy of Flickr/keso s CC BY 2.0)