Fujitsu Will Buy Control of U.K. Computer Firm : Technology: The purchase of 80% of International Computers Ltd. may signal the start of mergers between Europe’s struggling firms and cash-rich Japanese companies.
Fujitsu, Japan’s leading computer maker, said Monday that it will buy a controlling share of Britain’s top computer manufacturer in the first major purchase of a European computer company by the Japanese.
Fujitsu’s purchase of 80% of International Computers Ltd. for $1.2 billion expands the Japanese company’s growing reach in the global market for computers, semiconductors and other high-technology products and automatically makes it one of Europe’s leading computer makers, well ahead of the creation of a single European market in 1992.
The purchase also allows Fujitsu, the world’s third-largest computer maker, to replace Digital Equipment Corp. of Maynard, Mass. in the No. 2 spot, behind International Business Machines.
In the works for the past 18 months and widely rumored during the past 10 days, the deal, however, has ramifications far beyond the immediate participants.
Analysts said they expect additional deals between Europe’s struggling computer industry and cash-rich Japanese companies eager to expand without the expense and trouble of establishing local subsidiaries. Further, analysts noted, the Fujitsu deal is sure to sharpen competition for IBM, the world’s No. 1 computer maker and a leading force in the European computer market.
“Europe is changing its attitudes toward the Japanese and beginning to accept them in their computer markets,” said Ulrich Weil, a technology analyst in Washington. “And there are sure to be more changes ahead.”
Although the Fujitsu purchase of ICL is the largest deal of its kind, it is not the first.
Earlier this year, Mitsubishi purchased Apricot Systems, a small British personal computer maker. In addition, several other European electronics companies have ties to larger Japanese firms. For example, NEC Corp. has a 15% stake in a subsidiary of the French company, Cie. des Machines Bull, and Hitachi Ltd. has links with Italy’s Ing. C. Olivetti & Co.
Before its 80% purchase of ICL, Fujitsu had a nine-year technology-sharing agreement with the British company. But until the latest deal, Fujitsu’s European operations consisted of a computer manufacturing plant in Spain and a semiconductor-making plant in Ireland, as well as a semiconductor marketing operation throughout Europe.
“The message is becoming increasingly clear for companies throughout the world,” said Michael Borrus of the Berkeley Roundtable on the International Economy. “If you’re not already in Europe with your own operations, and you want to be a global player, you’re going to have to find a partner in Europe.”
Among those most often mentioned as potential European partners are the ailing computer operations of Philips N.V., the Dutch electronics company; the sagging computer operations of Bull of France, and the erratically performing computer operations of Italy’s Olivetti.
Although analysts said the full effects from the growing presence of Japanese companies in Europe will not be seen for years, the latest deal makes Japan a major player in the European mainframe computer market for the first time by giving them the dominant market share position in Britain. However, because ICL, whose sales last year were approximately $2.9 billion, has only a small market presence beyond Britain, analysts said Fujitsu will be on its own as it attempts to expand its European operations.
And Fujitsu left little question that it would expand its operations. “We look forward to promoting the ICL name vigorously in its key markets,” Takuma Yamamoto, Fujitsu’s chairman, said at a London press conference.
ICL’s principal markets have been British governmental agencies and retailers, and its market share in that country is said to be second only to IBM.
GLOBAL COMPUTER SALES
1989 sales Company / Country (billions) 1. IBM / U.S. $62.7 2. Digital Equipment / U.S. 12.7 3. Fujitsu / Japan 11.9 4. Unisis / U.S. 10.1 5. NEC / Japan 10.0 6. Hitachi / Japan 9.8 7. Hewlett-Packard / U.S. 8.1 8. Olivetti / Italy 7.3 9. Bull S.A. / France 6.5 10. NCR / U.S. 6.0
Source: Dataquest
