Lenovo, which has made a global commitment to selling more PCs to consumers, could soon acquire Packard Bell.
Once a major brand name in the U.S., Packard Bell is based in the Netherlands and ranks among market share leaders in consumer and business sales.
Lenovo issued a statement Tuesday saying the world’s third leading PC manufacturer was working through a third party to acquire Packard Bell. The company did not disclose any details of the “memorandum of understanding.”
“The Company is currently continuing negotiation with the independent third party and undertaking certain necessary inquiries with third parties and/or government bodies in preparation for the entering into of definitive agreements for such proposed acquisition,” Lenovo said.
Lenovo is coming off a strong quarterly earnings report in which profits climbed by 12 fold over a year earlier. The company also plans to see a PC in China for under $200, and to broaden the appeal of its laptops Lenovo is adding preloaded Linux software from Novell on some models.
Acer, while trails Lenovo in global PC sales, has been publicly touting plans to make an acquisition. Packard Bell had been mentioned as a target. So, too, has been Gateway in the U.S.
John Hui, who lives in Taiwan and owns Packard Bell, confirmed the potential deal.
"Lenovo and I have indeed signed a MOU granting them exclusivity to purchase Packard Bell once all regulatory and contract obligations are fulfilled," Hui said, according to IDG News Service.
"The (intended) acquisition signifies Lenovo’s determination, commitment, and long-term planning in entering the PC consumer market after it has successful completed its merger with IBM PC," Hui said. "Packard Bell will provide Lenovo a spearhead into Europe and a jump start into the PC consumer market."
Hui bought Hewlett Packard from NEC last September.
In global sales, Lenovo leads Acer 8.3 percent to 7.2 percent market share. Both companies trail No. 1 HP and No. 2 Dell by a wide margin, according to analyst firm IDC.
Packard Bell also sells consumer electronics.
Lenovo, which purchased the personal computer arm of IBM in 2005 and has its headquarters in both Beijing and Raleigh, N.C., is the world’s third-largest computer maker by shipments.
Packard Bell is the No. 4 seller of desktops and No. 6 in laptops in Western Europe.
Should Lenovo acquire Packard Bell, it would become the fourth largest PC vendor in Western Europe.
Packard Bell had $2.1 billion in revenues in 2006.
JPMorgan analyst told Bloomberg news that the deal would be a boost for Lenovo.
“Lenovo has no consumer presence in Europe and Packard Bell is strong in countries like U.K., France and Italy,” said Charles Guo, an analyst at JPMorgan. “These are important markets.”
This spring, Lenovo launched a worldwide effort to increase sales to consumers. The leader of the initiative is Lenovo Chairman Yang Yuanqing, who has been called China’s Bill Gates.
An acquisition would give Lenovo a sales boost, IDC analyst Richard Shim told the Wall Street Journal. However, John Spooner, an analyst at Technology Business Research, noted that Lenovo would face a challenge of incorporating a new brand just as it did when it acquired IBM.