Lenovo Intends to Take Over Packard Bell

by Anton Shilov
08/08/2007 | 01:39 PM

Lenovo, the world’s third largest maker of personal computers, announced on Wednesday that it had reached a preliminary agreement to acquire Packard Bell, a known, but not a major supplier of PCs from <%BANNER[article]%>Europe. The move will allow the company to expand its European operations.

“The company is in discussion with an independent third party in relation to a proposed acquisition of Packard Bell, a computer company in Europe and has entered into a memorandum of understanding with such party to explore the possibilities of the proposed acquisition,” a statement by Lenovo reads.

Today Packard Bell is the number three in the European PC consumer market and in the top three in the region’s main markets, including the UK, France, Spain, Italy, the Netherlands and Belgium. Meanwhile, Lenovo is the sixth largest PC supplier in Europe and it is believed that it is hardly profitable on that market. Packard Bell is also expanding into emerging markets, entering key countries in Eastern Europe, the Middle East, Africa and Latin America through a series of strategic partnerships with major local players, according to the company’s own claims.

Currently Packard Bell commands approximately 2% of the world’s PC market, whereas Lenovo supplies about 7% of PCs, according to data from IDC market research firm. If the transaction proceeds without issues, Lenovo will be able to more successfully compete against companies like Acer, Fujitsu Siemens and Toshiba in Europe as well as command a substantially larger market share worldwide.

A problem with the combination of Lenovo and Packard Bell could be different business approach. If Lenovo runs large centralized manufacturing sites, then Packard Bell tends to manufacture its products on the markets they are intended for and tailor its offerings according to market requirements.

Lenovo is currently continuing negotiation with the independent third party and undertaking certain necessary enquiries with third parties and/or government bodies in preparation for the entering into of definitive agreements for such proposed acquisition. The transaction, if materialized, may constitute a discloseable transaction of Lenovo under the Hong Kong Stock Exchange listing rules.

“Shareholders of Lenovo and potential investors should note that the proposed acquisition may or may not materialize. Further announcement will be made by the company as and when appropriate to comply with the Hong Kong Stock Exchange listing rules,” the company noted.