FUJITSU Ltd, Japan's biggest software-services company, has agreed to buy Siemens AG's 50-percent stake in their computer-making venture for about 450 million euros (US$567 million) to expand its server operations.
The transaction for Fujitsu Siemens Computers Holding BV is expected to be completed on April 1, Siemens and Fujitsu said yesterday. Bernd Bischoff, the venture's chief executive officer, resigned for personal reasons and has been replaced by Chief Financial Officer Kai Flore, Munich-based Siemens said.
The purchase will let Tokyo-based Fujitsu gain customers in Europe, the Middle East and Africa and research facilities for product development to expand server sales. The move by Siemens, Europe's largest engineering company, will fit into Chief Executive Officer Peter Loescher's plans to focus operations on automation equipment, power networks and medical scanners.
"For Siemens it's not a core business. For Fujitsu it is a core business," Andreas Willi, an analyst at JPMorgan Chase & Co with an "overweight" rating on Siemens, said by telephone with Bloomberg News from London. "It's always easier when a business is managed by one company instead of two."
Siemens and Fujitsu agreed to start the joint venture in June 1999. Fujitsu Siemens ranked fourth in sales of servers in Europe, the Middle East and Africa in the second quarter, behind Hewlett-Packard Co, Dell Inc and International Business Machines Corp, according to researcher IDC.
Global sales of servers will probably rise 3.7 percent this year to US$56.4 billion, after climbing 3.6 percent last year, according to an October 8 report by Merrill Lynch & Co. Growth will slow in 2009 to 1.9 percent, the report said.
"The acquisition will help bolster our presence in emerging markets, an area of strength for Fujitsu Siemens," Fujitsu President Kuniaki Nozoe said in Tokyo yesterday.
Fujitsu rose 6.6 percent to close at 401 yen in Tokyo trading before the announcement. Siemens shares rose 2.7 percent to 47.70 euros on Monday.
Netherlands-based Fujitsu Siemens earned net income of 69 million euros and operating profit, or sales minus the cost of goods sold and administrative expenses, of 72 million euros in the year ended March 31, Fujitsu said.
The venture's sales revenue totaled 6.61 billion euros, with computers for corporate users contributing 28 percent and servers accounting for 24 percent. These are the venture's two largest divisions.