Lenovo Makes Bid for Packard Bell

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Current number three computer maker Lenovo has announced it plans to buy Packard Bell, saying it has entered into a memorandum of understanding with an independent third party to buy the European computer maker. Lenovo has reportedly been competing with Taiwan’s Acer to buy the firm; the two companies have been competing fiercely to increase their share of the global PC marketplace, where they currently tussle for third place behind Hewlett-Packard and Dell.

Possible financial details of a Packard Bell acquisition have not been disclosed, with Lenovo only noting the deal, if it goes through, might constitute a “disclosable transaction” under Hong Kong stock exchange rules. Packard Bell is currently valued at about $800 million. Packard Bell was acquired by eMachines founder Lap Shun “John” Hui in October of last year for an undisclosed amount. Hui currently owns five percent of U.S. computer maker Gateway, leading to speculation that Lenovo’s move might lead to an acquisition of Gateway. Before acquiring Packard Bell, Hui offered Gateway $450 million to take over its retail business; Gateway declined.

A Packard Bell acquisition is seen as a good move for Lenovo, potentially enabling it to expand its European market share, where the company doesn’t currently have a strong footprint and is barely profitable. In contrast, rival Acer already does significant business in Europe, and wouldn’t benefit as much from rolling in another European computer maker.