Lenovo, Compal in $300M joint venture, shares jump
Added On:9/27/2011 6:41:00 PM
Lenovo Group Ltd. will team up with Compal Electronics Inc. to manufacture laptops in China as it looks to boost production. According to the sources, the world's No.3 PC brand has entered into a $300 million venture with Compal Electronics, pushing their shares up significantly.
Through this acquisition, Lenovo expects to overtake Dell Inc. this year as the second-biggest vendor globally. Both companies will pump in $100 million initially followed by an additional $200 million over the subsequent 18 months, depending on business climate and capacity expansion.
Lenovo will hold 51 percent stake of the venture and Compal will own the rest. The venture is expected to start full-scale production by the end of 2012, sources cited. Analysts said that in the short run Compal would benefit from the agreement, although there could be some long-term uncertainty over client loyalty.
The agreement will help secure Lenovo's production as it seeks to increase its global market share.
Earlier this year, Lenovo formed a joint venture with NEC Corp to sell laptops in Japan.
Tags: Lenovo Group, Compal Electronics, NEC Corp, laptops
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