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Lenovo and NEC form a joint venture

New alliance may form the largest PC group

Lenovo and NEC Corp.announced a strategic relationship that creates a joint venture which may forms one of the largest PC group.

The agreement gives both Lenovo and NEC an opportunity to grow their commercial and consumer PC businesses and expanded distribution channels, according to the Lenovo.

The new joint venture also combines NEC’s product development capabilities and services with Lenovo’s global supply chain.

In this deal, Lenovo and NEC will be called NEC Lenovo, 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 per cent stake in the new joint venture, while NEC will hold a 49 per cent stake.

Hideyo Takasu, president of NEC personal products will become president and CEO of the new joint venture, while Roderick Lappin, currently representative director and president of Lenovo in Japan will become executive chairman.

Upon closing, NEC will receive from Lenovo $175 million through an issue of Lenovo shares. The transaction is expected to close by June 30, 2011.

Yang Yuanqing, CEO, Lenovo said the agreement with NEC is a perfect fit for our strategy and reinforces our commitment to our core PC business while, at the same time, providing important new opportunities for growth.

Nobuhiro Endo, president of NEC said that Lenovo is the right partner at the right time for NEC, and he believes that the two are creating a strategic relationship today that will benefit NEC and our customers for many years to come.

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.

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 including products such as tablets and servers.