Lenovo Group is acquiring the entire interest of mobile handset business Lenovo Mobile Communication Technology Ltd. from a group of investors led by Hony Capital. The deal is valued at approximately $200 million in cash and Lenovo shares. Lenovo divested Lenovo Mobile in March 2008, as part of a plan to refocus on the company’s core PC business.
Lenovo Group today announced that it is acquiring the entire interest of Lenovo Mobile Communication Technology Ltd. from a group of investors led by Hony Capital, the private equity arm of Legend Holdings. Consideration of the acquisition is approximately US$200 million in cash and Lenovo shares. Today’s announcement signals that Lenovo is gearing up its efforts in the burgeoning mobile Internet market in China. Lenovo Mobile now ranks No.3 in China’s mobile handset market and is the No.1 domestic brand. The transaction is conditional upon Lenovo independent shareholder approval.
Convergence between the personal computing and mobile handset industry has been a key technology trend over the past several years worldwide. The two technologies today provide very different user experiences that are evolving and combining to create new generations of devices, applications and Internet services. In addition, China is entering a high growth phase. Driven by the government and telecom service carriers, the demand for mobile Internet devices has created a huge market.
Industry analysts project the China mobile Internet market will grow to exceed US$16 billion by 2014, fueled by the rapid evolution of 3G mobile broadband and accompanying multimedia Internet services.
As a global leader in IT industry, Lenovo has been following the business opportunity in the fast growing mobile Internet market. With this acquisition, Lenovo aims to maximize the combined synergies of the two companies in product innovation, lean manufacturing, strong distribution channels and retail presence to lead the market for new mobile handheld devices in China.
Yang Yuanqing, CEO of Lenovo Group, said: “As Lenovo’s global PC business continues to make steady progress, we view mobile Internet as a key growth opportunity moving forward globally. Lenovo has prepared itself in this area. We have developed first class products with excellent hardware and operating systems integration. We will launch these innovative new products in China soon. With Lenovo’s brand, strong channel and excellent operation platform, we’re confident in our ability to execute our mobile Internet strategy and make it our next growth engine after the China business.”
Lenovo Mobile has an experienced and successful leadership team in the China mobile industry, healthy financial performance, an extensive channel network, and good relationships with domestic telecom carriers in China.
Lenovo divested Lenovo Mobile in March 2008 in order to refocus on the Group’s core PC business and this acquisition reflects the changed market conditions of the past 18 months as described above.
ABOUT LENOVO MOBILE COMMUNICATIONS
Lenovo Mobile Communication Technology Ltd. (“Lenovo Mobile”), established in 2002, is a well known player in the Chinese mobile phone industry, specializing in the research, development, production and marketing of mobile phones. Lenovo Mobile is dedicated to providing “stylish, simple, innovative and high-quality” products and value-added services that provide personalized solutions to satisfy individual needs and enhance the joy of mobile communication. Relying on its independent research and development and powerful sales channels, Lenovo Mobile has become a fundamental influence in the Chinese handset industry. For more information, see www.lenovomobile.com.
Lenovo (HKSE: 0992) (ADR: LNVGY) is dedicated to building exceptionally engineered PCs. Lenovo’s business model is built on innovation, operational efficiency, and customer satisfaction as well as a focus on investment in emerging markets. Formed by Lenovo Group’s acquisition of the former IBM Personal Computing Division, the Company develops, manufactures and markets reliable, high-quality, secure, and easy-to-use technology products and services worldwide. Lenovo has major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, North Carolina. For more information, see www.lenovo.com.