Lenovo plans to ‘catapult’ service business with $613.6M investment in Hong Kong tech firm

RESEARCH TRIANGLE PARK – Earlier today, Lenovo announced a new strategic partnership, under which the company will establish a technology solutions business in the Asia Pacific region.

The company, which has a significant Triangle workforce, will partner with PCCW Limited, and the partnership will be known as PCCW Lenovo Technology Solutions Limited or PLTS for short.

According to a statement, jointly released, the new venture will “unlock synergies.”

“The partnership reinforces and strengthens our transformation from a devices and infrastructure company into a global leader in IT solutions and services,” said Ken Wong, an executive vice president at Lenovo and the president of Lenovo’s Services and Solutions Group, in the joint statement. “Our solutions and services business continues to be the cornerstone of our growth ambitions and this strategic partnership with PCCW accelerates the opportunity to bring innovative solutions to market for customers across Asia Pacific.”

Wong noted in the statement that the partnership could “catapult” both firm’s business, citing strength in the PCCW Limited workforce and performance in key industries.

Lenovo shifting strategy, reorganizes to invest in infrastructure, solutions, and AI

Here’s the deal

According to the companies, the partnership is set to be implemented through consideration of $613.6 million with $100 million of that total compensation amount paid in shares of Lenovo’s stock “by way of allotment.”

Under the deal, PCCW will receive 86,424,677 shares of Lenovo stock at closing.

Following the close, Lenovo will take a 20% stake in PCCW Network Services, which the statement noted is the holding company of PCCW’s IT solutions business.

Along with a “direct 80% interest in PLTS,” Lenovo will become an “effective 84% shareholder in PLTS,” according to the statement.

Based in Hong Kong, PCCW Solutions is an IT and business process outsourcing provider in Hong Kong, mainland China, and Southeast Asia, according to the statement, as well as holding other overseas investments. PCCW Limited also holds a majority stake in the HKT Trust and HKT Limited, a telecommunications service provider, according to the statement.

Lenovo announced last year it planned to shift its strategy, reorganizing its business divisions, with the intention of being seen as a solutions company.