Talks to integrate the personal computer businesses of Toshiba Corp., Fujitsu Ltd. and Sony spinoff Vaio Corp. broke down after the firms failed to agree over streamlining measures, it has been learned.
According to sources familiar with the talks, the three companies failed to reach an accord over the consolidation of their production bases and personnel cuts after a merger. The firms had also aimed to enhance profitability by trimming procurement costs for computer parts.
The three firms had been in talks since late last year with the aim of streamlining the development, production and sales of their products. They were looking into the possibility of setting up a holding company with investment from Japan Industrial Partners (JIP) -- a fund that holds majority stakes in Toshiba, Fujitsu and Vaio -- and placing the three firms' PC businesses under its umbrella to maintain their respective brands. If the plan went ahead, the three brands were expected to overtake NEC Lenovo Japan Group to dominate the domestic PC market.
After the talks hit an impasse, the three companies extended the negotiation deadline by four months to June, but the talks ended up breaking off after JIP apparently suggested it would pull out.
Toshiba, which is in the midst of restructuring efforts in the wake of a fraudulent accounting scandal, intends to cut unprofitable businesses and is poised to "continue seeking integration in the future," according to an inside source. As Fujitsu is aiming for a similar goal, the two companies are expected to pursue respective paths toward integration or spin off their PC units under new frameworks.
Toshiba had been planning to return to the black with a 120 billion yen profit in the 2016 business year by slashing the workforce across the entire Toshiba group by some 19,000 and spinning off its PC unit. The aborted merger talks, however, make it difficult for the company to reach that goal anytime soon.