Lenovo Group buys stake in PCCW’s digital units for $614 million

(Reuters) – China’s Lenovo Group will buy stakes in two units of investment holding firm PCCW Ltd for a combined $613.6 million in cash and stock, the world’s largest maker of personal computers said on Tuesday.

The company will buy an 80% stake in Digital Era Enterprises and a 20% stake in PCCW Network Services, a holding company for a unit that provides technology solutions to government entities in Hong Kong.

“The transaction allows the company to expand its IT services capabilities, its suite of service offerings as well as the geographic and vertical coverage of customers and partners,” Lenovo said.

The company, which last month warned of a hit to shipments in the short term due to China’s COVID-19 lockdowns exacerbating chip shortages, will pay PCCW $513.6 million in cash and issue 86.4 million shares at HK$9.025 a piece. Lenovo’s shares closed at HK$7.57 on Tuesday.

PCCW anticipates a gain of $100 million from the disposal, it said in a separate filing, adding it will use the proceeds to invest in growth areas and to repay debt, among others.

(Reporting by Sameer Manekar in Bengaluru)