Fujitsu Bids For British Firm

COMPUTERS

WITH one determined thrust into Britain, Japan's leading computer company has poised itself to become the world's largest maker of mainframe computers after International Business Machines Corporation. Fujitsu Ltd. has also positioned itself to win a strategic place in Europe's high technology industry ahead of the creation of the European Community's (EC) single market at the end of 1992.

Fujitsu last week agreed to buy International Computers Ltd. (ICL), Britain's only mainframe computer manufacturer. The purchase, which needs approval by the British government and the European Commission, is expected to put the company ahead of Digital Equipment Corporation of Maynard, Mass., in terms of global revenue. But Fujitsu will still lag well behind Armonk, N.Y.-based IBM, which accounts for over one-third of the world computer business.

``This gives Fujitsu a stronger foothold in Europe,'' says Tim Marrable, an analyst with Kleinwort Benson. ICL already enjoys a high profile in Europe, and with Fujitsu's investment strength behind it, the company will be well placed to expand.

ICL appears to have been selected by Fujitsu as a ``marriage partner,'' a British computer industry executive says, because it is profitable and has existing contacts and outlets throughout Europe. These extend into Eastern Europe, where Japan sees prospects of lucrative markets.

ICL's parent company, the electronics conglomerate STC, lacked the cash to boost investment in ICL. Fujitsu had the cash - and the determination to expand operations in Europe.

Fujitsu's $1.3 billion bid for ICL is the second move by the Japanese this year into the British computer market and thus into the 12-nation EC. In May, Mitsubishi Electric acquired the hardware side of Apricot, which builds personal computers.

Fujitsu intends to retain ICL's corporate identity. The new company's board will be chaired by Peter Bonfield, ICL's current chief executive. However, Fujitsu will control seven of the nine seats on ICL's board.

Fujitsu can expect complaints from competitors that its long-term strategy is to dominate the European mainframe industry, Mr. Marrable says.

Sources in the government of Prime Minister Thatcher say they see few problems with the deal, but the Labour opposition says the deal is unwelcome. Lewis Moonie, the party's technology spokesman, calls it ``the result of a say nothing, do nothing'' approach by the government.

Michio Naruto, Fujitsu's managing director, says he is ``100 percent confident'' that London will approve the deal, making ICL ``an important and brilliant son in Fujitsu's family.''

Obtaining approval in Brussels, headquarters of the European Commission, the EC's executive arm, may be more difficult. Commission sources confirm that the deal will be examined to see whether it conforms to EC rules on competition.

Those rules are due to be tightened on Sept. 21. Fujitsu and ICL hope to gain approval for the merger ahead of that date.

Commission officials have to measure the impact on the operations of Siemens in West Germany, Groupe Bull in France, Phillips in Holland, and Olivetti in Italy, all major players in Europe's computer industry.

Fujitsu could counter any of their objections by pointing out that ICL talked without success about a merger to all four of them.

Meanwhile, a Groupe Bull company has agreed to buy a computer marketing company in the United States (see box, left).

An EC source says Fujitsu's apparent readiness to let ICL go on running itself, without interference from Tokyo, might be expected to impress Sir Leon Brittan, the Commission official who will be asked to approve the deal.

On the other hand, Fujitsu does not have an unblemished record in the field of competition. Some years ago it was heavily criticized by the Japanese government for having offered to design a computer system for a local authority for a price of one yen.

This was seen as an attempt to prevent rival computer makers from competing. -30-{et

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