Urgency drives Lenovo deal in Brazil

September 5, 2012: 12:00 PM ET

Lenovo's planned purchase of local PC maker CCE underscores the company's global ambitions.

FORTUNE -- With its planned acquisition of Brazilian electronics company CCE, Chinese computer maker Lenovo moves one step closer to its bold vision of becoming the world's leading PC maker by attacking emerging markets.

Lenovo, already the market leader in China and India, on Wednesday said it plans to acquire CCE, the No. 2 PC maker in Brazil. A person close to the transaction tells Fortune the deal is valued at about $150 million.

News of the deal comes as Lenovo's partner in Japan, NEC Corp., sold its entire stake in Lenovo, a move that sent the PC maker's shares down 8% in Asian markets.

Lenovo already has a presence in Brazil. It recently invested $30 million in a factory there. But executives felt the company needed a local partner to jump-start its operations in the area. "We could do it ourselves," Milko van Duijl, president of Asia Pacific and Latin America for Lenovo, tells Fortune, "but we'd miss the World Cup. We'd miss the Olympics." Brazil will host soccer's World Cup in 2014 and the Summer Olympic Games in 2016. Both events are expected to spur demand for electronics as consumers seek new devices to watch events and games.

Van Duijl says the CCE deal was a strategic fit for Lenovo, but also a cultural one. "The first time I met the family I sensed that they were solid, focused on quality and brand value." He says senior management will stay on as part of the transaction. "Lenovo brings CCE an unmatched legacy of quality," Roberto Sverner, founder and CEO of CCE, said in a news release. The acquisition is expected to close in the first quarter of 2013.

Lenovo has been on an upswing, boosting its share of the global PC market to 15%, up from 9% in 2009. Much of its success can be attributed to its strong position in China and other emerging markets, where market penetration is not as high as it is in the developed world.

Brazil, like China and India, is seeing an expansion of its middle class -- a trend that translates into increased demand for computers, televisions, and cell phones.

Of course, Lenovo still has work to do. "We don't feel we get to No. 1 if we don't take a more prominent position in the top five markets worldwide," Van Duijl says. Where does Lenovo lag? The U.S., where the company is the No. 4 player, behind HP (HPQ), Dell (DELL), and Apple (AAPL).

Editor's note: A previous version of this story incorrectly stated that Lenovo was the sixth largest PC manufacturer in the U.S. It is, in fact, the fourth largest. 

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Stephanie Mehta
Stephanie Mehta
Deputy Managing Editor , Fortune

Stephanie N. Mehta is the deputy managing editor at Fortune, overseeing technology coverage for Fortune. She also is a co-chair of the annual Brainstorm Tech conference, an annual gathering of tech and media thinkers. Previously, Mehta spent seven years as a tech writer at Fortune covering the telecom and media industries. She also has worked for the Wall Street Journal and the Virginian-Pilot in Norfolk, Va.

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