Lenovo and NEC form JV

Companies also exploring strategic cooperation in other areas as the JV aims to create Japan’s largest PC group.

Lenovo and NEC Corporation (NEC) on Thursday 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 fastest growing top-five PC maker in the world*. The new joint venture gives both Lenovo and NEC a unique 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.

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$175million 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, according to a Lenovo report.

“The agreement with NEC is a perfect fit for our strategy. It reinforces our commitment to our core PC business while, at the same time, providing important new opportunities for growth in Japan,” said Yang Yuanqing, CEO, Lenovo. “We have a long history of innovation in Japan and a firm commitment to the Japanese market. Now, we are combining our global strength and momentum with NEC’s market leadership. It is the perfect partnership for us and for our customers.”

“Lenovo is the right partner at the right time for NEC, and we believe that we are creating a strategic relationship today that will benefit NEC and our customers for many years to come, said Nobuhiro Endo, President, NEC. “We believe this alliance will further reinforce and expand our PC business in Japan, upholding the NEC brand name and will continue to provide Japanese PC users with products supported by high quality and service. Taking this strategic relationship as a first step, NEC will accelerate expansion of our IT business worldwide.”

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, and the joint venture will leverage each company’s strength, such as NEC’s product development capabilities and Lenovo’s procurement resources to develop and to provide the most suitable products to all users in Japan. 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 (JOCs); developing, producing, and selling devices such as tablets; and selling additional IT platform products such as servers.