Asia Business Channel

PC merger between Fujitsu and Lenovo

Fujitsu confirmed last week that it had agreed to merge its struggling PC business with Lenovo, giving the Chinese computer giant a controlling share of the business.

Fujitsu, a Japanese multinational information technology equipment and services company based in Tokyo, said it had "decided to formally sign a deal" with Lenovo, and the government-backed Development Bank of Japan (DBJ) on a "strategic partnership" to develop and sell PCs.

Lenovo, a Chinese multinational technology company with headquarters in Beijing and known as the world's largest PC maker, will hold 51 percent of the shares in Fujitsu's PC subsidiary, while the DBJ will hold five percent, Fujitsu said in a statement.

The deal should allow Fujitsu to pour more resources into its profitable IT services operations, while also pushing ahead with a sweeping restructuring programme that will see 3,200 job cuts. The decision came after Fujitsu said last month it was in talks with Lenovo over a potential deal, which pushed Fujitsu shares up by 7.8 percent. However, Fujitsu shares were trading down 2.44 percent at 874.1 yen after the announcement.

The company had been in talks with Toshiba and Vaio to merge their once high-flying personal computer businesses, but both negotiations failed to result in a deal. Once-mighty Japanese firms have struggled in the face of stiff competition from lower-cost rivals overseas, including in China and South Korea.

Earlier this year, Taiwan's Hon Hai, better known as Foxconn, took over struggling Japanese electronics maker Sharp after it faced huge losses and mounting debts.

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