Acer Buys Gateway, Shocks Lenovo - Lenovo to Lose Packard Bell
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Lenovo has been in exclusive talks to acquire Packard Bell for weeks now. But thanks to Acerís acquisition of Gateway, it looks unlikely that it will be allowed to do so. I can see you wondering what one has to do with the other. Watch closely then, because this is a little tricky to follow.
Back in 2004, Gateway bought eMachines from John Hui, its founder. John Hui also owns many shares in Packard Bellís parent company, PB Holding Co. SARL. In fact, Hui is also the largest shareholder in Packard Bell. As part of the contract when Gateway bought eMachines, it also gained the right of first refusal to acquire shares in Packard Bellís parent company. Guess what Gateway said it was going to do? If you said ďexercise that right,Ē give yourself a gold star.
Packard Bell is not exactly popular in the US; in fact, it exited the US market back in 1999. On the other hand, itís a well-known brand in Europe. In 2005 it was one of the top five home PC brands. Packard Bell ranks ninth in global PC sales with a two percent market share. The company is estimated to have made as much as two billion euros in revenue in 2006. It caters to the mid-to-high end consumer PC market.
Whatís more, when it was first revealed that Lenovo was in talks to acquire Packard Bell, some analysts saw the move as a possible first step toward acquiring Gateway. Lenovo executives must be tearing their hair out over this latest turn of events. John Hui must be a wily negotiator indeed.
Keep in mind that Lenovo was the ninth largest PC maker worldwide before it acquired IBMís business. That deal catapulted it to third place, but the company found itself struggling after the acquisition. At the time, analysts foresaw a number of potential problems, not the least of which was the two firmís radically different cultures. Lenovo specialized in low-end systems, while IBM made high-end machines with lots of features suitable to a corporate culture Ė like fingerprint scanners for the security conscious.
Lenovo had just started to get its legs and was preparing to expand into more markets when Acer swooped in and got there first. So what can we expect to see now that the ducks are starting to line up?
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