The gradual absorption of Packard Bell Electronics Inc into NEC Corp took a big step forward yesterday when NEC announced that all its personal computer operations outside Japan would be merged into Packard Bell – where NEC owned 19.9% of the voting equity but had pumped in a lot more cash for non-voting paper before the deal. The ownership structure of the proposed Packard Bell-NEC Inc has not been disclosed yet, but it will be headquartered at the Packard Bell base in Sacramento, California under the latter’s chairman, Beny Alagem. The assets of the NEC Technologies Inc personal computer and server business are valued at around $300m, and are claimed to have achieved sales of about $1,200m in the year to March 31. In return for the transfer of assets, NEC is getting an undisclosed amount of preferred stock in the new company, which will manufacture and distribute desktop and notebook computers and servers under the Zenith, NEC and Packard Bell brand names outside Japan. A separate Packard Bell-NEC Japan unit will be set up – this, it appears, is because while NEC feels the need to be selling the DOS/V standard personal computers that are taking the Japanese market by storm, it does not want to diminish the equity in its proprietary PC-9800 series personal computers, whose dominant market share is being eroded at an accelerating pace. Operations in China have yet to be worked out. Packard Bell-NEC will begin operations on July 1. First-year sales are estimated at $8,000m, and Packard Bell-NEC reckons it will have 15.1% of the US market, 11.4% of the worldwide market, but that last number must include NEC’s own sales in Japan. Packard Bell-NEC is intended to go public in the US with an initial offering of shares within two years. Packard Bell will hold five seats on the new company’s board, with NEC and Compagnie des Machines Bull SA each having two seats. It appears that Bull and NEC are each keeping their voting stakes at 19.9% so that they don’t have to consolidate Packard Bell’s figures with their own, in case anything should go horribly wrong.
