Lenovo acquires PC and consumer electronics group in Brazil

Lenovo Group is acquiring three companies of the Digibrás group, a Brazilian maker of consumer electronics, mobile phones and PCs, it said Thursday, as it tries to break out of its large dependence on the Chinese market.

The Chinese company, which is paying 300 million Brazilian Reais (US$147 million) to vendor Digibrás Participações and other owners, in a combination of cash and stock, for full ownership of the companies, said that the proposed acquisition more than doubles its PC market share in Brazil.

The three companies are Digiboard Eletrônica da Amazônia, Digibrás Indústria do Brasil, and Dual Mix Comércio de Eletrônicos, Lenovo said in a regulatory filing. The companies use the trade name CCE.

Brazil's PC market is forecast to grow this year by 8 percent over last year to 17 million units, according to research firm IDC.

Lenovo has been expanding in other markets as well including through a joint venture in Japan with NEC to make PCs, and the acquisition of a majority stake in German PC and consumer electronics maker Medion Electronics.

It also announced in July that it was investing $30 million to set up a manufacturing and distribution center in Sao Paulo, Brazil. The center which is scheduled to start operations in December will make consumer and commercial PCs for the local market. The announcement represented "the first step in a bold, long-term plan that will encompass both organic and inorganic growth strategies, with a goal to more than double our market share in Brazil," Lenovo said at the time.

After the acquisition, which is subject to customary closing procedures, and is expected to close in the first quarter of 2013, Lenovo said it will have a manufacturing presence and a full suite of consumer products across all four screens -- PC, tablet, smartphone and TV -- for what it describes as the new "PC+ era".

CCE has seven factories and a large sales network with over 20 million points of sale in the country, according to its website. It has close to 6,000 employees.

The company's present business plan does not anticipate any workforce restructuring as a result of the acquisition, Lenovo said in a statement. It will retain the current management team including CCE founder and CEO, Roberto Sverner, in the combined company.

Lenovo reported that net profit in its fiscal first quarter ended June 30 grew by 30 percent year-over-year, while revenue was up 35 percent. The company said in its earnings report that China generated $3.5 billion for the company in the quarter, accounting for 44 percent of its total sales.

Lenovo is forecast by IDC to remain the market leader in the third quarter after securing a 35.2 percent share of the Chinese PC market in the second quarter of this year.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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