Lenovo Group's "annexation" of PCCW's service business accelerates its transformation strategy again

Lenovo Group (HK:0992) (00992) today announced on the Hong Kong Stock Exchange that it has entered into a definitive agreement with PCCW Limited, a leading IT solutions provider in the Asia Pacific region and the number one systems integration and application developer in Hong Kong, to form a strategic partnership to establish PCCW Lenovo Technology Solutions Limited ("PLTS") joint venture to establish a technology solutions business in Asia Pacific. The strategic partnership will combine the combined strengths of Lenovo and PCCW to create value for customers, employees and shareholders of both companies.

The total value of the partnership is approximately US$613.6 million, comprising US$513.6 million in cash and the equivalent of US$100 million in Lenovo shares (to be satisfied by the allotment and issuance of 86,424,677 Lenovo shares to PCCW at closing). The shares to be allotted and issued will be issued at HK$9.025 per share, which represents a premium of 19.2% over the closing price on 14 June 2022.

Upon completion of the transaction, Lenovo will hold 84% of PLTS, including 80% of PLTS directly and 20% of PCCW Network Services, the holding company of PCCW's IT solutions business, which will focus on expanding its business primarily in Asia Pacific.