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Lenovo Group to Acquire PCCW in a $613.6 Million Deal

Industry: Consumer Electronics
Current: Other Industry Indicators

Lenovo, the world's largest maker of personal computers, plans to acquire PCCW
The acquisition is based on a total consideration of $613.6 million
The objective of the deal is to establish a strategic partnership to create a technology solutions business in the Asia Pacific region

Lenovo Group Limited, a China-based global technology company and the world's largest maker of personal computers, has entered into a definitive agreement to acquire PCCW Limited, a Hong Kong-based IT service provider and an integration and application development company, to create a technology solutions business in Asia Pacific. After the announcement, the share price of Lenovo fell as much as 2.6%, while PCCW gained 2.4%.

About the Deal

Lenovo acquires PCCW for a total consideration of US$613.6 million, which comprises US$513.6 million in cash and US$100 million through the issue of 86,424,677 Lenovo shares to PCCW, at a price of HK$9.025 per share. HSBC functions as the financial advisor, while Cleary Gottlieb Steen & Hamilton (Hong Kong) functions as the legal advisor to Lenovo. J.P. Morgan is acting as financial advisor while Slaughter & May is acting as legal advisor to PCCW.

Under the terms of the agreement, Lenovo will be acquiring stake worth $613.6 million in two digital units of Hong Kong telecom firm PCCW. It will buy an 80% stake in Digital Era Enterprises and a 20% stake in PCCW Network Services. Under the partnership, the company will have a new name, PCCW Lenovo Technology Solutions Limited.

An Opportunity to Unlock Synergy

The acquisition will enable the company to broaden its IT service capabilities, service offerings, and regional and vertical coverage of clients. According to the president of Lenovo’s Services and Solutions Group, the collaboration reinforces and strengthens its transformation from a device and infrastructure company to a global leader in IT solutions and services.

Last year, Lenovo announced that it planned to shift its strategy, reorganizing its business divisions, to become a solutions company. The recent deal is perfectly aligned with Lenovo’s strategy to become a solutions company in the areas of devices, services, and software. The strategic partnership will make the company a one-stop customer solution provider that integrates services, devices, and digital infrastructure.

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