Fujitsu Says It Is in PC Merger Talks With Lenovo

Fujitsu Says It Is in PC Merger Talks With LenovoJapan’s Fujitsu said on Thursday it was in talks to merge its struggling PC business with Chinese computer giant Lenovo, sending its shares soaring as the company also announced a recovery in profits.

The talks come as Japanese personal computer makers work to scale back their businesses as consumers shift to smartphones and tablets.

Tokyo-based Fujitsu said it and Lenovo, the world’s largest PC maker, are “exploring a strategic cooperation in the realm of research, development, design and manufacturing of personal computers for the global market”.

The two firms, which are yet to reach an agreement, are also talking with government-backed Development Bank of Japan for financial and strategic support.

Fujitsu shares rose by 7.8 percent on news of the merger negotiations to close at JPY 599.3.

In a separate announcement, the company said its net profit for the six months to September came to JPY 11.8 billion ($113 million or roughly Rs. 755 crores).

The recovery marks a reversal from a net loss of JPY 15.9 billion during the same period last year, thanks to cost-cutting efforts particularly in the PC and mobile phone operations.Operating profit stood at JPY 25.9 billion, up from an operating loss of JPY 12.4 billion the year before, while sales fell 7.0 percent to JPY 2.08 trillion (roughly Rs. 1,32,869 crores).

Fujitsu also slightly revised down its annual sales forecast to JPY 4.5 trillion, JPY 100 billion lower than an earlier forecast due to revised exchange rate assumptions, but kept annual net profit projection at 85 billion yen.

Tags: Fujitsu, Lenovo, PC Merger, PC, Laptops

Lenovo, Fujitsu Said to Discuss Merger of PC Businesses

Lenovo, Fujitsu Said to Discuss Merger of PC BusinessesLenovo, Fujitsu Said to Discuss Merger of PC Businesses
The companies are aiming to reach agreement this month: Nikkei
Lenovo is also seeking to make further inroads into smartphones
Fujitsu would move its PC planning, development, manufacturing divisions
Lenovo Group Ltd. is in talks with Fujitsu Ltd. to merge their personal-computer businesses, with the Chinese manufacturer taking a majority stake in the venture, a person with knowledge of the matter said.

The two sides are still discussing pricing and terms, said the person, who asked not to be identified because the talks are private. The companies are aiming to reach agreement this month, according to the Nikkei newspaper, which reported the deal earlier Thursday.

An alliance with Fujitsu would give Lenovo, the world’s biggest PC maker, a bigger foundation to expand its share. Lenovo had 19.4 percent of the global PC market in 2015, compared with 2.1 percent for Fujitsu, according to IDC. Lenovo is also seeking to make further inroads into smartphones, while embarking on a plan to cut $1.35 billion from annual costs and eliminate 3,200 jobs. The company said in August that it was making progress and would turn around its business next year.

Fujitsu shares rose about 7 percent to JPY 575.7 as of 10:45am in Tokyo, after climbing as much as 8.6 percent. The stock had declined 11 percent this year through Wednesday. Lenovo’s shares climbed as much as 2.7 percent in Hong Kong, but remain down more than 30 percent in 2016.
Japan’s PC makers have been scaling back their operations or exiting the business entirely, as more people use mobile devices to check e-mail, manage their finances and access the web. Fujitsu had been struggling to find a partner, and talks with Vaio and Toshiba Corp. were on the verge of collapse, the Wall Street Journal reported in April.

The Nikkei reported that the Lenovo-Fujitsu business may merge in the future with Lenovo’s PC venture with NEC Corp., which was formed in 2011. Fujitsu would move its PC planning, development, manufacturing divisions to Lenovo as part of the deal, the Nikkei said, with about 2,000 Fujitsu workers likely to be relocated to Lenovo.

Tags: Fujitsu, Fujitsu PCs and Laptops, PC, Laptops, Lenovo


Aditya Birla Nuvo, Grasim fall most in 8 years after merger announcement

The merger is not only complicated in its structure, but also unconvincing on several other elements, including the valuations of the holding company and its disadvantage to minority shareholders. Photo: AFP

The merger is not only complicated in its structure, but also unconvincing on several other elements, including the valuations of the holding company and its disadvantage to minority shareholders. Photo: AFP

Mumbai: Aditya Birla Nuvo Ltd shares on Friday tanked close to 24.63% intraday as analysts and minority investors disapproved of its proposed merger with Grasim Industries Ltd. The merger is not only complicated in its structure, it is also unconvincing on several other elements, including the valuations of the holding company and its advantage to minority shareholders.

Grasim shares declined close to 8.35% intraday.

Both stocks saw their biggest single-day fall in eight years,Bloomberg data showed.

Aditya Birla Nuvo touched a low of Rs1,180 a share, a level last seen on 30 June, and fell as much as 24.63%, its steepest fall since 24 October 2008. It closed the day at Rs1,290.15, down 17.6% from the previous close.

Grasim Industries touched a low of Rs4,160 a share, a level last seen on 11 June, and fell as much as 8.35%, its steepest fall since 11 December 2008. It closed the day at Rs4,565, up 0.57% from the previous close.

HSBC Securities and Capital Markets India Pvt. Ltd trimmed its target price as well as stock recommendation on Grasim to “hold” from “buy”. Other domestic and international brokerage firms are reviewing their forecasts based on the management commentary following the merger announcement on Thursday evening.

“Merger will likely remain an overhang as increasing complexity will be perceived negatively. Concerns regarding increasing complexity with addition of several non-core businesses remain,” said an HSBC note.

ALSO READ | Aditya Birla to merge Nuvo, Grasim

Emkay Global Financial Services Ltd saw the merger transaction as a negative for existing shareholders. “Grasim becomes a holding company for the financial services business (in addition to being the holding company for cement business, UltraTech). Likelihood of using cash flows to fund Idea’s requirements is an additional negative. We don’t see any synergistic benefits from this transaction,” it said, downgrading its recommendation on Grasim to “reduce” from “buy”.

Analysts said that minority shareholders are likely to raise objections to the merger deal as Grasim will continue to get the same or higher holding company discount when compared with Aditya Birla Nuvo. This is simply because Grasim will become the holding company of Idea Cellular Ltd and the demerged financial services entity which will be named Aditya Birla Financial Services Ltd under the new structure.

“There is no value unlocking foreseen through the deal,” said an analyst with an American broking firm, on condition of anonymity due to the firm’s compliance rules.

CLSA in a note to investors wrote that the transaction creates a complex conglomerate and adds confusion for minority shareholders. “The new company has multiple businesses that share no commonality whatsoever,” it said.

The Aditya Birla Group is merging two of its main companies, Aditya Birla Nuvo and Grasim Industries, both of which also serve as holding companies, in an attempt to create a stronger entity, and unlock shareholder value by spinning off and listing one of Nuvo’s subsidiaries, Aditya Birla Financial Services Ltd (ABFSL).

ALSO READ | The rise of Aditya Birla Financial Services

“Grasim will suffer the holding company, conglomerate discount that Aditya Birla Nuvo suffered for all these years. Sector-focused investors will not invest in such a diversified entity when there are direct operating entities listed,” said Shriram Subramanian, founder and managing director at proxy advisory InGovern Research Services Pvt. Ltd.

“If you see the beneficial interest of promoters in each of the companies, it is in the range of 20-30%, yet the promoters are able to retain control through cross-holdings and layering,” Subramanian said. So, the to-be-listed Aditya Birla Financial Services will have only 26% minority shareholders, and promoters will have 74% control, while the “true” beneficial interest of the promoters is only 39%, he said.

“We always advocate simple shareholding structures and business structures, but this maze of businesses will disappoint investors,” Subramanian added.

The merger will create an entity with yearly revenue of Rs59,766 crore, net profit of Rs4,245 crore and earnings before interest, tax, depreciation and amortization, a measure of operating profitability, of Rs12,000 crore.

Each shareholder of Nuvo will receive three new equity shares in Grasim for every 10 held. That means a shareholder with 100 shares of Aditya Birla Nuvo will end up with 30 shares of Grasim. And each shareholder of Grasim (post-merger) will receive seven shares in ABFSL for each share held. That means a shareholder with 100 Grasim shares will also get 700 shares of the finance company. In aggregate, each shareholder of Aditya Birla Nuvo who owns 100 shares will receive 30 shares in Grasim and 210 in ABFSL, Mint reported.

“It’ll come up for voting. I think we looked at multiple options of restructuring and when we looked at all the options, I think we felt as a management team, this is a restructuring which makes sense for both sets of shareholders,” Ajay Srinivasan, chief executive, ABFSL, said during a conference call to investors’ concerns over dilution in the holding in the financial services business and whether the board had other alternatives to the merger plan.

“…there would be pros and cons for every structure, which one can consider. And I think we can keep debating on that, but at the end of the day when we looked at the shareholders’ perspective and what makes sense for shareholders, we thought this is a great way of restructuring and giving access to shareholders directly to financial services, and at the same time take care of the residual, a smaller holding company, which would have risen as a result of a demerger of financial services.

“What we presented to shareholders to look at is a very strong company, which offers pretty much a proxy to the India growth story. It’s a mix of manufacturing and services businesses. It is the story which delivers significant growth going forward and this is an option to shareholders to either invest in this company or look at investing in each of the operating businesses, which we are giving as an option,” Srinivasan explained.


China eyes steel merger to create rival to ArcelorMittal

Steel slabs sit on flatcars after being manufactured at the ArcelorMittal steel mill complex in Cleveland, Ohio. Photo: Luke Sharrett/Bloomberg

metallic slabs sit on flatcars after being synthetic at the ArcelorMittal metal mill complex in Cleveland, Ohio. photograph: Luke Sharrett/Bloomberg
Beijing: China’s second– and sixthlargest steelmakers by using output have entered restructuring talks, which analysts say could presage a merger that could create the country’s biggest mill, and a employerwith the scale to rival the likes of ArcelorMittal SA.

trading become suspended inside the listed units of kingdom-run Shanghai Baosteel institution Corp. and Wuhan Iron & steel organization Corp. as their dad and mom talk “strategic restructuring,” theorganizations stated in statements on Sunday, without elaborating. the two companies had a blendedmarket price of $sixteen.3 billion as of Friday’s near, and potential of greater than 70 million tonnes. Analysts including the ones at Citigroup Inc. and Mysteel studies referred to the information as heralding a potential merger of the businesses.

The talks spotlight China’s efforts to overhaul its inefficient country-run region and bolster an economic system headed for its slowest increase in decades. A deal among the two might be the biggest in China’s metals sector for the reason that December, whilst China Minmetals Corp., its largest dealer, agreed to shop for a central authority-owned engineering and mining group, because the state seeks to reduceovercapacity at the same time as creating globally competitive firms.

“The merger of Baosteel and Wuhan steel suits with the authorities method of enhancing efficiency andreducing competition and overcapacity,” stated Xu Xiangchun, chief analyst at consultancy Mysteelresearch. “With these leading the effort there might be greater mergers in advance.”

on the same day that the talks had been introduced, the chairman of China’s pinnacle financial planner, the national development and Reform fee, stated the nation will cut steel capability through 45 million tonnes this year. It had already pledged to reduce potential through as tons as a hundred and fifty million tonnes thru 2020.

even though China’s metal output has peaked, the home marketplace stays saturated, Chen Derong,general supervisor at Baosteel, informed an enterprise convention remaining month. because thekingdom seeks to clean its surplus, its exports are running at document degrees, creating a global glut of the metal and drawing fire from competitors from Japan to the us China’s crude metallicproducingcapability reached a document 1.2 billion tonnes on the cease of ultimate year, consistent with the China Iron & metallic affiliation.

As such, any merger is unlikely to have much effect at the united states’s exports, stated Wu Wenzhang,chief analyst for Shanghai Steelhome data generation Co. “Exports are a matter of worldwide exchange,distant places demand and chinese merchandise’ competitiveness, which have little to do with a country’s manufacturing ability,” he stated.

China’s internet metallic exports may additionally continue to be above a hundred million tonnes thisyear, Wu brought, with domestic metal intake falling through 20 million tonnes to approximately 680 million tonnes as investment slows and the state turns to intake-led boom rather than spending on infrastructure.

information of the restructuring talks gave a considerable raise to metallic charges. Reinforcement bar futures in Shanghai rose as plenty as 6.four%, the maximum in six years, on expectancies that a mergermight lessen overcapacity, said Wu Zhili, an analyst at Shenhua Futures.

A mixed employer would leapfrog domestic rival Hesteel institution in phrases of production andpositioned it simply in the back of ArcelorMittal in the international ratings. both firms hire extra than100,000, consistent with a record by way of Citigroup on Monday, which stated it expects more mergers of China’s nation-owned organizations on the heels of any Baosteel-Wuhan restructuring.

A aggregate could be “high quality for Baosteel within the lengthyterm as the 2 companies at the same time manage over 60% of autosheet and over eighty% of the silicon metallic marketplace in China,” in step with Citi. both agencies are directly underneath the state-owned property Supervision andadministration fee of the nation Council, China’s cabinet. Bloomberg