RESEARCH TRIANGLE PARK – Lenovo’s plans for establishing a major presence in Europe took a big hit on Monday night.
Gateway said it had exercised a right of first refusal to buy Packard Bell, a PC manufacturer based in Belgium. The announcement was not a surprise. Still, Gateway’s move to thwart Lenovo’s plans to acquire Packard Bell is a setback for the PC manufacturer, which maintains its headquarters in Morrisville.
Earlier this summer, Lenovo disclosed that it was in talks to acquire Packard Bell. A successful deal would have given Lenovo infrastructure and market recognition in Europe where its own name is not that well known and Packard Bell is.
Acer, which is based in Taiwan and is battling Lenovo for third place in worldwide PC sales, agreed to acquire U.S.-based Gateway for $710 million in August. And Gateway held that valuable first refusal option with Packard Bell.
While who ranks third – and far back as it is – behind No. 1 HP and No. 2 Dell in world PC sales is not that important since HP and Dell have such commanding leads in share. But through purchasing Gateway and Packard Bell, Acer does keep Lenovo at least temporarily from entering the European market in a significant manner.
"From Acer’s perspective, they know Lenovo’s strong in Asia, and they know Lenovo wants to grow in the U.S. and Europe," Samir Bhavnani, an analyst with Current Analysis West, told Cnet. "This throws up a little bit of a block and gives Acer an advantage in Europe."
Up until Monday’s announcement, Lenovo executives such as Chief Executive Officer William Amelio held out hope to acquire Packard Bell. Lenovo wants to expand sales to consumers and small businesses, which were not targets under the IBM PC division that Lenovo acquired two years ago.
What happens next? The bet here is Amelio and company will find another way to enter Europe.