NEC Extends Chinese Joint Venture

China's Lenovo Group and Japan's NEC agreed to extend their joint venture agreement through 2026.

The agreement signed by the two parties included amendments to the initial transaction. Amendments to the NEC brand license agreements stated that the parties to the NEC brand license agreements entered into the NEC brand license amendment agreements on October 7, 2014, to extend the terms of the NEC brand license agreements for two more years to June 30, 2018.

Headquartered in Tokyo, NEC's businesses cover information technology solutions, network solutions, and electronic devices. On January 27, 2011, Lenovo and NEC announced the joint venture agreement, under which the two parties established a PC joint venture that sells NEC-branded PCs and tablets in the Japanese market through its subsidiary. The initial agreement had a 5-year term lasting through June 2016. Lenovo BV owns a 51% stake in the JV, while NEC owns the remaining 49%.

In addition, pursuant to the business combination agreement, Lenovo BV granted NEC a put option to require Lenovo BV to purchase all of the NEC JV ordinary shares from NEC and NEC granted Lenovo BV a call option to require NEC to sell all of the NEC JV ordinary shares to Lenovo BV. The original put option and the original call option are exercisable at any time after July 1, 2016, or within three months of certain trigger events set out in the business combination agreement with respect to all of the NEC JV ordinary shares.

Prior to this, Lenovo chief executive officer Yang Yuanqing revealed that if acquiring NEC, Lenovo would return to a top three PC maker in the world.

So far, Lenovo has implemented several acquisitions. The Chinese company previously announced the completion of acquisition of IBM x86 server business. Earlier than that, the company invested USD2.9 billion in the acquisition of Motorola Mobility to deploy in the mobile Internet sector and it invested USD100 million in the acquisition of Unwired Planet, which owns 3G, LTE and other important mobile patents.

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